| 12.8°C Dublin

Ireland’s biggest domestic companies may be taxed at 15pc rate, says Finance Minister Paschal Donohoe

Close

Paschal Donohoe

Paschal Donohoe

pd

pd

/

Paschal Donohoe

Some of Ireland’s biggest domestic companies may end up taxed at the G7’s preferred 15pc rate if a global agreement is struck, Finance Minister Paschal Donohoe has said.

However, the minister said the plan, including the rate that could ultimately apply, is not a done deal despite backing for the tax plan from powerful advocates including US President Joe Biden.

The 139 countries in the Organisation for Economic Co-operation and Development (OECD), including Ireland, will also have a say, including on details like a rate and possible exemptions, Mr Donohoe said. “It’s important to recognise that this is just a signpost in the discussions that could yet develop in the OECD,” he said at a press conference in Dublin.

Mr Donohoe attended last weekend’s London meeting of G7 finance ministers, who backed the global minimum tax plan, in his capacity as President of the Eurogroup. 

But he said that as the tax talks widen to include more countries he’ll press for the right of small countries to make a case for what he called “legitimate tax competition”.

“I will absolutely be making the case for legitimate tax competition and for the ability for small economies like our own to set our rate at 12.5pc,” he said. “It is too early to say agreement can be reached on a future rate, and if it is that that figure will be 15pc.”

However, he said moves on global tax reform are now happening quickly and a deal for significant changes is likely this year, with implications for Ireland. Depending on their size, the biggest Irish multinationals could end up among the large corporations subject to the global minimum corporate tax rate, Mr Donohoe said.

If so, they’d pay tax here in addition to the standard 12.5pc Irish rate, he said.

The shift in global tax rules will mean a financial hit to Ireland, calculated as a loss of €2bn a year in corporate tax income by the mid-2020s, beginning with a reduction in income from next year, Mr Donohoe said.

That has been expected and was included in Department of Finance forecasts in 2019.

Daily Digest Newsletter

Get ahead of the day with the morning headlines at 7.30am and Fionnán Sheahan's exclusive take on the day's news every afternoon, with our free daily newsletter.

This field is required

With the economy growing, the expected shortfall will not have to be made up with higher income or other tax, unless spending commitments rise, he said. Whether Irish companies here are caught by the tax will depend on the final parameters of a global tax deal, he added.

He refused to be drawn on which individual companies could be captured by the G7 plan, but said it could apply based on the size of business the tax will hit. Ireland’s biggest multinationals include Ryanair, CRH and Kerry.


Privacy