Ireland wants clarity on the rate at which the US will tax multinationals’ global profits before signing up to a wider corporate tax deal, the Tánaiste and Enterprise Minister has said.
Speaking in Washington yesterday, Leo Varadkar said he also wants assurances that a global minimum corporate tax will not go beyond 15pc.
US President Joe Biden wants to raise a domestic tax on US corporations’ worldwide profits to 21pc, although lawmakers in Congress are discussing a lower rate of around 16pc.
“We would need to see where that might be set,” Mr Varadkar told an event organised by the Centre for Strategic and International Studies (CSIS), a US think tank.
“That would have an impact on us, but we totally respect the right of the US to make that decision.”
Meanwhile, talks on a global minimum effective rate of “at least 15pc” are heating up, with a deal expected to be inked early next month during talks led by the Paris-based Organisation for Economic Cooperation and Development (OECD).
Mr Varadkar said he was still concerned by the inclusion of the phrase “at least” in a draft deal first inked in July and now supported by 134 out of the 140 countries in the talks.
Ireland is one of six holdouts, that include fellow EU members Estonia and Hungary, and Nigeria, Kenya and Sri Lanka.
“[For] any rate, we would want to know that it is the rate, and it’ll stay at the rate, and won’t change in five years’ time or in 10 years’ time.” Mr Varadkar said.
Reports in the Business Post over the weekend said the Government is “preparing to concede” to the OECD deal if the wording is changed and the rate is set at exactly 15pc.
Mr Varadkar said Ireland would rather be “in the tent both politically and economically” at the OECD but wanted to keep the corporate tax rate here “low and constant”.
“It would make more sense for us to be inside any global framework, and it’s in our nature to be inside global frameworks. It’s our instinct and that’s where we want to be,” he said.
“But one thing that has worked very well for us in our system is to have this low corporation tax rate. But it’s not just the rate, it’s the reliability. That’s why we would want to keep it low and keep it constant.”