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LAST UPDATE | 7 Oct 2021
IRELAND WILL SIGN up to a global agreement that would increase the State’s corporate tax rate for large companies to 15%.
Cabinet today agreed to sign up to the OECD proposals after the government risked seeing the country amongst a handful of states that would not agree to the minimum tax deal.
Speaking after Cabinet today, Finance Minister Paschal Donohoe said: “I believe that the upsides of being in such a historic international agreement far outweigh the downsides of staying out. This is a difficult and complex decision but I believe it is the right one.”
The proposals were approved by the G20 group of large economies in July and Ireland becomes the 135th out of 140 OECD countries to sign up.
Ireland did not sign up the plans in July with Donohoe stating that the government first wanted greater certainty about future rates.
The Cabinet’s decision comes ahead of a meeting under the auspices of the the OECD (Organisation for Economic Co-operation and Development) scheduled for tomorrow.
Ireland’s approval removes a key stumbling block to the global efforts and the G20 leaders are expected to formally sign off on the deal when they meet in Rome in late October.
Legislatures in country will then have to approve the reform with the OECD hoping that the new tax regime could be in place by 2023.
Holding off
The government had resisted committing itself to the deal until this week, first seeking clarity on a number of issues.
Tánaiste Leo Varadkar told the Dáil today that the government had received assurances that the State could operate two rates of corporate tax, with those below the €750 million threshold paying tax at 12.5%.
The Department of Finance said this evening that it expects that the 15% rate will apply to 56 Irish multinationals employing approximately 100,000 people, and 1,500 foreign owned companies based in Ireland employed approximately 400,000 people.
Taoiseach Micheál Martin told reporters in Slovenia yesterday that the change to the text “represents very significant progress” but that Ireland’s challenge is maintaining “certainty around tax for investors and for companies that are located here”.
Ireland has seen many multinational firms base themselves here in part because of the low 12.5% corporate tax rate that has existed since 2003.
A previous draft of the deal had seen nations agree that multinationals should pay “at least” 15% corporate tax, but the phrase “at least” was dropped partly due to Ireland’s insistence that more certainty was required.
Donohoe said this evening that this was critical to the government’s decision.
‘‘We have secured the removal of ‘at least’ in the text. This will provide the critical certainty for government and industry and will provide the long-term stability and certainty to business in the context of investment decisions,” he said.
In the hours after the announcement, Estonia’s government said it would also sign up to a 15% global minimum tax rate on multinational firms, leaving only Hungary as the last ‘hold-out’ nation.
“We are joining the global tax agreement,” Prime Minister Kaja Kallas said in a statement, adding that it “will not change anything for most Estonian business operators, and it will only concern subsidiaries of large multinational groups”.
- with reporting by Christina Finn and Rónán Duffy
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If only FFG displayed the same enthusiasm in providing a functioning health and housing system as they do for facilitating tax avoidance for multinationals, the country be in a much better shape.
@Ronaldo Blanc:
What utter drivel.
We have full and transparent tax laws, applied fairly and equally, as the ECJ recently affirmed in the Apple case which Ireland won.
Without FDI we would be Albania.
Out FDI policy has been an unmitigated success the world regards with envy.
We have 250,000 jobs that depend on FDI.
We have the highest per capital Corporate Tax take in the world.
Without that money, there would be no health system at all.
@Brinster: If only Irish people argued for better education system, public transport system, infrastructure, social services, etc. like they do for international tax evasion costing ordinary citizens billions upon billions per year.
Our ‘model’ is lazy. We have attracted so much FDI by cheating and now we must move on. Invest in green renewable energy, data chips, education, the technology of tomorrow, infrastructure, etc. and make the country attractive for FDI for the right reasons. There is no one policy that attracts FDI. We speak English, are part of the Eurozone, and are part of the EU/single market. These alongside so many other factors help make the case for FDI. Not just our stupid tax system that everyone is so quick to defend.
@Brinster: “Without FDI we would be Albania”.
Talking about drivel…
Yes, anything that threatens the corporations status quo is either utter drivel or a doomsday scenario, be it housing market, car insurance or corporate tax.
You’d wander how on earth other jurisdictions are not ending up like Albania…
@Ronaldo Blanc: just like you Ronaldo, I have no idea what you’re talking about
@Ronaldo Blanc: ha ha …. FFS
@Ronaldo Blanc: tax expert Ronaldo? Doubt it
@Brinster: applied fairly and equally don’t make me laugh! Tim Cook, CEO of Apple stood up on the US Senate under oath and said Ireland had given Apple a sweetheart tax deal and the Irish government said it hadn’t. I wonder which version to believe.
@Sean:
I believe the European Court of Justice, Sean, which ruled on that this year.
Fair, transparent and equal.
Endorsed by the highest European Court.
But hey, feel free to ignore basic, verifiable facts.
You’d have no argument if you didn’t.
Sure they don’t pay anywhere near 12.5% at the moment anyway! 12.5% is just a smokescreen.
@Mary Walshe:
Have they consulted Bono??
He is an acknowledged expert in all tax matters, well, nearly all.
@Sean Callan: honestly…. Enough with the Bono bashing. If he’s broken the law arrest him if not and he’s doing something morally wrong change the law but this incessant sniping at him is tiresome. He and his band have done a lot of good for this country….and his music is excellent!
@Mary Walshe:
That’s completely untrue, Mary.
Effective and Headline rates are closer in Ireland than anywhere else.
Irish companies pay their share – we have higher Corporate Tax receipts per capita than anywhere else.
Source –
@Mary Walshe: Mary, you are understandably getting confused by an aggregate tax rate frequently quoted that is based on a comparison of the total tax collected on sales in Ireland by these multinationals and their total profits, including profits on sales in the other European countries (taxed at 0% in Ireland) which they have been allowed to report in their Irish accounts.
The Irish government’s policy is to encourage in multinational corporations, allow them pay lower tax than they would pay elsewhere and get a few office jobs for a few people. There is no programme for native industry and development with real manufacture, such as many developing countries are doing. Ireland under the FFGG party is at the bottom with the begging bowl looking for what they call ‘direct foreign investment’ or DFG (American capitalism, vultures etc) to come and pay less tax so that our Fat Controllers can have a tiny share of the spoils while the citizens are pushed lower and lower. That’s why increasing numbers of voters are making the change to the real alternative.
@Willie Penwright: a few office jobs? FDI is responsible for the direct employment of 250,000 people here who make a massive contribution to the tax take. Then there is indirect employment in the form of suppliers and of course construction, the IFSC in Dublin wouldn’t exist but for multinationals.
@Willie Penwright: we are a tiny market of less than 5 million people. Without these organisations we are screwed
@GrumpyAulFella: and to add to that, those 250,000 are earning far higher then the average Irish wages so are paying a disproportionate amount of the overall income tax and are spening far more in the economy
@Elaine Phelan: and being paid with money made from customers outside Ireland. I worry that some have created the impression they pay no tax for a political agenda. These multinationals use tax havens, such as MS using Bermuda, to reduce some tax bills. Personally I prefer to see the tax havens tackled rather than a small change in the rate. Why are Irish waste companies based in IOM, Jersey, or British Virgin Islands? Was Brexit all about UK companies hiding in offshore accounts. It is a murky world but we benefit with money flowing into the country and economy
@Willie Penwright: You’ve answered your own point. We aren’t a developing Country. We left secondary industry behind decades ago because our cost paradigm does not work economically with low value added product. However, the good news is that in terms of high added value micro and midsize indigenous enterprise and services, growth has never been stronger and for the record they are very strongly supported to build by Enterprise Ireland and others.
@Willie Penwright: a few jobs. Such bollocks. About 20+ billion in real wages generated from 250k directly employed from FDI and many more again from service industries supporting these roles and businesses. Drivel
@Willie Penwright: As someone who worked for a US corporation that moved here many years ago because of our attractive corporation tax rates and has been employing hundreds of skilled employees ever since I respectably disagree.
@Mick Hyland: respectfully disagree.
@Mick Hyland: respectfully disagree.
@Willie Penwright: your first 2 lines were absolutely bang-on, possibly the most sensible words you have ever written in TheJournal……and then you drowned those words of reason in the 5h1te that followed
Paul Murphy, my local TD, years ago proposed to increase corporation tax and he was told his economics was *mad*. Now Donoghue is increasing it
@Alan Campbell: It’s the usual defense the FFG party have. Try discredit the opposition enough and maybe some of it will stick. But the public are copping on to that now.
@Alan Campbell: Donoghue was right, and it is only happening now because we are being forced to change by the OECD
@Elaine Phelan: we don’t have to change nothing forced we under law can charge as much as we like just because most countries are signing up doesn’t mean we have to. In the same sense that if most countries in the world go to war we would go but stay neutral why can’t we tell them to fcuk off we are not changing our rate. The only reason they are changing is greed the want the extra 2.5 percent tax to pay for all the dream plans when in the long term it’s going to goose the country. Sure they won’t care as by the time it happens they won’t be in office and will sail back to government after that term for another 100 years.
@El Poblo Escobar: I don’t think that is true. They know the extra 2.5% will not counteract the negative effects of this. Successive governments have resisted this, despite global pressure, but they are at the point now where that pressure has ramped up to the point where they can’t refuse any more
@Alan Campbell: Yesterday you said it was treason.
@Alan Campbell: Paul Murphy is? I’m so sorry.
Who do they be waving at in those pictures? Leo is always at it too.
@David Corrigan: I believe there was a mirror in front of him there.
The Irish government will tell the world that they are joining the 15% group,meanwhile will probably give the corporations huge concessions to write the tax off through some loophole
@James: Rightly so, they will leave otherwise to cheaper locations. Big corporations employe over 250k people. Leo said something correct, it’s larger economies want a larger slice of the pie. I don’t see the point in the free trade area if this is the case.
@James: that’s the way it is unfortunately – France for example has a much lower real rate of corporation tax than here. To compete with other nations we need favourable conditions, which includes, financial, logistical, and an educated workforce.
The Irish economy relies on these firms to provide high paid jobs, which are crucial.
@James: or form offshore subsideries
Can someone explain why this will be negative for Ireland tax take please? Does that outcome assume multinationals will leave Ireland as a result? If so, what categories of multinationals?
@HonDeDeise: You’ll get better informed replies than mine, but corporations and multinationals only care about their bottom line: profits. If there is less clear advantage to locating or remaining in Ireland, then they will factor that into their calculations. They will attempt to work around any ’15%’ rate with ‘creative accounting’, selective movement of assets outside of the agreed zone of CT taxation, tax breaks, lobbying, ‘persuasion’, carefully worded ‘threats’ of re-location, etc. The overall situation has swung irresponsibly in favor of big business over the last 70 years.
@HonDeDeise: I can only comment in regards to technology. They won’t just up and leave, but as products become obsolete, any new products will be developed in other more favourable locations. The process will be slow with headcount decreasing gradually. My guess is that ireland will do the same as France Germany Sweden etc and provide companies with huge grants in an effort to have them stay. At least we’ll have the increase in corporation tax to pay for those grants. So IMHO, we won’t see any gains from increasing corporation tax, we’ll see a reduction in workforce with a resulting reduction in tax take as we can no longer advertise 12.5 to attract new business and established businesses to develop their new products here.
@Barry Ryan: that sounds about right. Many people forget that the 250K directly employed by these firms and many thousands indirectly employed are what has our economy in such a healthy state to begin with. It’s the only reason why we’re seeing a strong rebound from the pandemic now. I would have thought that IT would remain strong as they’re willing to pay big labour costs for the skilled resources that we have here but manufacturing and sectors where labour might be more “portable” could be an issue.
@David A. Murray: thanks David. Appreciate your response. There’s also a development termed BEPS which encourages companies to record profits where employees are based. Hopefully that will slow down the offshoring of assets etc; and the impact won’t be too bad on existing jobs. As you point out, the decision frameworks for future investment decisions is a big question mark….
@HonDeDeise: most of the global tech companies have their EMEA headquarters in Dublin. For transfer pricing and tax reasons they need the bulk of their sales teams based in Dublin, servicing all EMEA countries. Most of the tech companies have smaller offices servicing the large local Enterprise level clients, but all mid-market and SMB is done from Dublin. It is getting increasingly difficult to hire people who speak these languages, salaries are increasing and with the cost of living in Dublin, it is hard to attract people to move here now. So if there is no tax incentives to have them work out of Dublin, it is inevitable these companies will instead start hiring in their local offices
@HonDeDeise: and to my point above, they can’t hire people who don’t speak the local languages to do these jobs, and they pay WELL over the odds for these languages. So as these people are instead hired in other countries, these high wages and large amounts of income tax will go, as well as the economy built around renting to and servicing these higher earners
@Elaine Phelan: surely a lot of these jobs will be home based going forward so could be resourced by people living outside Dublin?
@GrumpyAulFella: they are generally young people from European countries for language requirements. They don’t want to work from home down the country… They want the social life of the office and Dublin if they are moving here. And why would you hire them to work from Ireland as opposed to their home countries if there is no tax incentives to do so?
@GrumpyAulFella: imagine you are a 25 year old German. Would you move to Ireland to work from home down the country, not knowing a soul? Now imagine alternatively trying to hire an Irish person to service a German customer. The main reason these ENEA HQ’s were set up to service clients from here was due to tax
@Elaine Phelan: makes sense I guess. Definitely a case for deurbanisation though and I can see this happening over time as WFH and hybrid working becomes the norm. Would also relieve rent pressure in Dublin city too.
@GrumpyAulFella: in this context though, these people don’t want to move to Ireland necessarily, but that’s where the jobs are. The reason the jobs are here is because of the tax incentives. If these people are willing/wanting to work from home, they want to go it from their home countries. If the tax incentives fo away, then it makes total sense for these companies to hire in local offices in-country rather than Ireland
@Barry Ryan: thanks Barry
Since we clearly were forced to join the merry-go-round, does that mean the Lisbon treaty is voided? You know, the Irish sovereignty on tax, abortion or military neutrality? Sovereignty on tax is now gone, we voted in favour of abortion and Macron 1st is pushing for an EU army. I wonder why we bother with politicians as clearly, the EU rules here.
@Ryan O’hUallachain: What are you on about,what has that got to do with the article.
@Ryan O’hUallachain: that is very true, we opted out re tax rate, now we are forced to change, I see a universal tax structure coming down the road ….
Some spinless people in government guaranteed we the taxpayer will have to make up for any shortfall
@: well there may not be a reduction in tax take but if there is then obviously the other taxpayers will have to make up the shortfall or else cut back spending, do you think the government pay for everything themselves
They did what they were told to do. We are not an independent country wake up to reality. But who is the number one master and who is number 2, us or eu
What a joke that was our leverage over other countries
Hopefully we will find out today when we are getting the extra bank holiday and gift vouchers.
@joe oneill:
Will our OAPs hear about full restoration of 2008 entitlements?
Taken from us 13 years ago to bail out the reckless banks.
We note the great alacrity our millionaire TDS had full restoration and a
bit extra.
Why are we being denied our just entitlements???
@Sean Callan: Pensioners need to form a strong lobby group, take the publicans lobby for example, they managed to get 3k grants for new outdoor furniture for pubs even though many of the pubs don’t have outdoor areas, nobody from government bothered to check, just handed out money like confetti.
It’s all about getting organised, the country is awash with free money.
@Sean Callan: Why don’t you claim a pup payment as a construction worker,thousands of lads living the life of Reilly whilst living at home in places like Romania.
@Sean Callan: Stop voting FG/FF
Google 1 Limited Profit €749million, Google 2 Limited Profit €749 million and so on
That’s the beginning of the end…. Never meant to spend my retirement in Ireland, but looks like I’ll have to plan leaving earlier….
I hope this doesn’t ruin us
If the Americans moved out, better get hold of a tractor as nothing else much here.
Well you can always charge them extra tax however government can give various rebates in other areas e.g. Reduction in license fees or maybe a sweet land deal e.g. setting up a special economic zone? This way taxes can be maintained without an actual increase.
Lets see how many companies leave ireland because of this
@Stewart O Neill: Power cuts more likely cause than a tax they don’t pay
I can’t see any corporation paying 15%. Most haven’t paid the 12.5%.
This is bad for Ireland spineless
Agreed wrong heading should have read told
And who is going pay for the mica houses now?
Don’t suppose we’ll claim it
have your say