It is a decision that was not an easy one for the government in Dublin: After long hesitation, Ireland is now participating in the planned global tax reform. Irish Finance Minister Paschal Donohoe said Thursday evening that this move was “right, sensible and pragmatic”. The agreement will give the economy long-term stability and planning security. Ireland will certainly remain an attractive location for international investments, explained Donohoe – behind his back the Irish flag and that of the European Union were raised.
Dublin only approved the project, coordinated by the industrial nations organization OECD, after it had been able to enforce its own demands. According to reports, there is only talk of a tax rate of “exactly 15 percent” – instead of the previous “at least 15 percent”. This is also a big step for Ireland, after all, it gives up the previous corporate tax rate of 12.5 percent for large multinational corporations. The current tax rate should, however, continue to apply to companies with an annual turnover of less than 750 million euros. In addition, there will continue to be tax breaks for research and development expenses.
Ireland’s Finance Minister Donohoe pointed out that the EU Commission had assured Ireland that the Brussels authority would stick to the global tax rate of 15 percent and not seek an increase for the EU countries. Ireland was very careful in the negotiations at the OECD level to rule out any further possible tax hikes in the future. EU Economic Affairs Commissioner Paolo Gentiloni described Ireland’s decision at the short message service Twitter as “an important and extremely positive step in Europe’s joint efforts towards a fairer and more stable global tax system”.
The OECD wants to inform about the status of the deliberations this Friday. So far, more than 130 countries have joined the plan for a global minimum tax. A final decision on this is to be made by the end of October among the 20 leading industrialized and emerging countries (G20). OECD chief Mathias Cormann said he was optimistic that an agreement could be reached this month.
The aim of the worldwide minimum tax is to ensure more justice. Above all, politicians want to prevent multinational corporations such as Google, Amazon and Apple from being able to keep their tax burden extremely low thanks to clever profit shifting. That should be over soon.