Ireland will be able to keep its 12.5pc corporate tax rate and attract US investment regardless of a global tax deal, a senior US lawmaker has said.
Yes I do think so because Ireland is a market-driven economy,” said congressman Richard Neal, who chairs the House Ways and Means Committee, the chief tax-writing committee of the House of Representatives.
“The relationship between Ireland and the US certainly will not be diminished because we have a discussion about tax policy, that’s for sure.
“I think it’s not worrisome, these discussions will proceed.”
He made the comments at a virtual event organised by the Institute for International and European Affairs, just a day after the US proposed a global minimum corporate tax rate of 15pc, lower than a previous 21pc plan.
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“I do agree with the president’s initiative on a global minimum tax,” Mr Neal said.
“The administration has already moved a couple of numbers and I think that we want to make sure that the final number is the one that we can adhere to.”
However, Mr Neal did say he would like to “harmonise international tax rates” and end “treaty shopping” by multinationals, and that a potential EU-US trade deal “will invite a harmonised tax regime”.
The EU and US are not currently negotiating a trade deal.
On Thursday, the US Treasury proposed a global minimum tax rate of “at least 15pc” in order to reach a deal by the summer at talks led by the Organisation for Cooperation and Development (OECD).
In a statement the US Treasury “underscored that 15pc is a floor and that discussions should continue to be ambitious and push that rate higher”.
EU tax chief Paolo Gentiloni said yesterday that he had a “positive” view of the US plan and that it was “quite possible” to reach a deal by the summer.
Finance Minister Paschal Donohoe said Ireland would play its part in reaching a deal.
“I have had reservations about a high minimum effective tax rate on the basis that it could be a step towards global tax harmonisation, rather than addressing aggressive tax planning,” Mr Donohoe said in a speech to the American Chamber of Commerce Ireland Global Conference yesterday.
“I firmly believe that an agreement can be reached and I will work constructively towards such an agreement.”
The minister has used a series of speeches recently to press his case for small countries’ right to compete on tax and said Ireland would remain “attractive to international investment”.
In 2020, multinationals contributed €11.8bn in corporation tax receipts.
The Department of Finance estimates it could lose €2bn a year in receipts as a result of the OECD plan.
The European Commission has pledged to make an OECD deal binding on EU countries in 2023, according to a roadmap on business taxation published earlier this week.
Neither the OECD deal nor any EU legal proposals would force Ireland to increase its 12.5pc corporate tax rate.