Finance Minister Paschal Donohoe
Paschal Donohoe, Ireland's finance minister, delivers a speech at Bloomberg's European headquarters in London, U.K., on Friday, March 15, 2019. The European Union has no wish to "trap" the U.K. in the so-called backstop, Donohoe said, as he urged lawmakers in London to back Theresa May’s plan for exiting the bloc. Photographer: Chris Ratcliffe/Bloomberg
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IRELAND is one of a tiny minority of countries refusing to sign up to a preliminary corporate tax deal struck in Paris yesterday.
Talks among officials from 139 countries resulted in a tentative agreement to tax the largest multinationals at a 15pc minimum rate.
The Department of Finance said Ireland “fully” supports parts of the deal but has a “reservation” about the 15pc rate.
It was endorsed by 130 countries. Ireland’s usual EU allies on tax, including Luxembourg, Malta and The Netherlands, have all signed up. Only four EU countries – Ireland, Cyprus, Hungary and Estonia – did not.
Negotiations will continue over the summer, with officials at the Paris-based Organisation for Economic Cooperation and Development (OECD), which is leading the talks, not giving up hope of getting the nine remaining countries on board.
Finance Minister Paschal Donohoe said he remains “committed to the process”. He has previously pledged to “vigorously” defend Ireland’s 12.5pc tax rate and its right to “legitimate tax competition”.
“This package does not eliminate tax competition, as it should not, but it does set multilaterally agreed limitations on it,” said OECD Secretary-General Mathias Cormann.
“It also accommodates the various interests across the negotiating table, including those of small economies and developing jurisdictions.
The two-track deal targets the largest multinationals only.
Large companies with a global turnover of more than €20bn and profit margins of at least 10pc will have to pay taxes in countries where they earn at least €1m in revenue.
The 15pc minimum tax applies only to groups with annual consolidated revenues of more than €750m, where some companies in the group are paying less than the minimum.
If implemented in full, it would limit the practice where corporates shift profits around low or no-tax jurisdictions to minimise their taxable income.
The deal will be discussed by finance ministers from the world’s 20 largest nations (G20) next Friday.
The OECD will then be charged with the fine-tuning in time for an October G20 leaders’ summit.
The 130 countries that signed up to the deal yesterday say they want to implement it by 2023.