Ireland is preparing to sign a proposed global agreement to impose a minimum tax on companies. This concession will remove an obstacle to an agreement that will reshape the structure of multinational corporations. On the eve of an important meeting between 140 countries hosted by the Organization for Economic Cooperation and Development, the Irish government stated that it would join the push to impose a minimum tax rate of 15% on the profits of corporate entities.
The Irish Minister of Finance Paschal Donohoe said in a statement announcing this commitment on Thursday night: “This agreement is a balance between our tax competitiveness and our wider position in the world.” This decision “will” To ensure that Ireland becomes part of the future international taxation framework solution.”
Ireland, which chose to switch to, was only one of the few countries that refused to reach a global agreement in the first place. Some countries are seeking so-called “distributions,” to a certain extent, to exempt certain activities from the minimum tax, while others are bargaining in another part of the negotiations to discuss where the profits of large companies are levied.
French Finance Minister Bruno Le Maire said that a compromise must be reached this month, provided that “if you don’t do it now, you will never do it.” What he is worried about is that if a final agreement cannot be reached at the G20 summit this month, the historic window of opportunity to end years of negotiations will be closed, because the opportunity for approval by the U.S. Congress will soon disappear.
The agreed tax rate is 2.5 percentage points higher than Ireland’s long-standing tax rate level, and low tax rates have always been one of the pillars of the Irish economic model. The country has maintained a tax rate of 12.5% since 2003, which is far below the OECD average of about 23%. The Irish Ministry of Finance estimates that due to reforms, Ireland will lose up to 2 billion euros ($2.3 billion) in corporate taxes.