Ireland will tap into other small countries to influence the outcome of talks on a far-reaching tax treaty to change the way multinationals pay their taxes, Treasury Secretary Paschal Donohoe said.
Speaking to reporters, Mr Donohue reiterated that the Treasury is expected to lose around € 2 billion in corporate tax revenue under the current proposals, but insisted that Ireland will retain its attractiveness as a destination for foreign investment.
His remarks came after a G7 meeting of the richest Western countries agreed on Saturday that multinational companies should be subject to a minimum global tax rate of at least 15% on their corporate profits, no matter where in the world they operate. The agreement has companies such as Apple, Pfizer, Google and Microsoft on its websites that have major bases in Ireland.
The G7 countries – the US, Japan, Germany, France, the UK, Italy and Canada – went much further than many had thought possible by agreeing on a proposal to overturn the current global regime. The major nations propose that taxation rights should be allocated according to “the market” or the country where multinational corporations generate most of their revenues.
Irish economists and tax experts have said that if there was broader support from the G20 and all 139 countries participating in an OECD-led process, this important part of the G7 agreement would make Ireland likely to attract less investment in the future becomes .
Mr Donohoe said the G7 tax deal was “an important signpost” that a broader agreement would be reached in the OECD talks. He expected an agreement before the end of the year.
However, Ireland will try to find a common cause among small and medium-sized countries that have the same interests in shaping a broader deal, he said.
“It is also relevant that there are 139 countries at the table and that every agreement requires the approval of small and large countries, developed and developing countries,” said Donohoe.
He was confident that “we will see other open small economies and medium-sized countries indicate what their national interests are within the scope of the [OECD] Process, ”he said.
Mr Donohoe would not indicate or say how many small and medium-sized countries the government would try to work with in the coming months.
When asked about reports that the UK government – a member of the G7 and a signatory to the weekend deal – would seek to exempt the City of London from the proposed tax reform, Mr Donohoe said that such reports showed that all countries were eligible for their own nationals would argue interests, at the OECD and elsewhere.
Likewise, Ireland has “national interests that we want to protect,” he said.
The commitment to Ireland has risen after US President Joe Biden put the weight of his new administration behind global tax reform. Ireland has increasingly turned to multinational corporations for big revenue, with corporate tax revenues rising from € 4 billion seven years ago to € 12 billion last year.