KEY POINTS:
When Irish Finance Minister Paschal Donohoe delivered his bumper budget speech last month he was clear once again that the country’s corporate tax rate would remain as is.
But there was an acknowledgment that “change is inevitable” on an international level, referring to OECD negotiations, and that Ireland would feel the impact of that.
“Agreement at the OECD level would present challenges for Ireland as changes to the international tax framework would see a reduction in the level of profits taxable here,” he said.
“Failure to reach agreement at the OECD would also have negative consequences for the exchequer.”
Ireland’s headline 12.5% corporate tax rate — much lower than most industrialized nations — has been key to attracting many multinationals to the country, especially among tech giants with Apple, Google and Facebook having presences in the EU nation. Corporate tax receipts have helped offset some of the coronavirus-fueled challenges for Ireland’s economy, as shown in the budget.
The tax rate and Ireland’s taxation regime for multinationals has also drawn much criticism, typified by the infamous Apple tax case.
Negotiations continue at the international level through the OECD to establish comprehensive reforms of global taxation, including a new framework for taxing tech firms and establishing a minimum corporate tax base.
That mission aimed to come to some kind of agreement by the end of 2020 but was recently pushed out to mid-2021 with both the U.S. and Europe still jostling for position.
Manal Corwin, head of Washington National Tax at KPMG and a former Treasury Department official, told CNBC that the discussions are as much political as they are technical, with the pandemic making things even more difficult.
“The strategic bet is let’s get as much of the technical underpinnings of both of these pillars done as possible and framed and comments in from the public and refined and so forth so when the ability and the capacity to return to getting a political agreement is there, then it can happen quickly,” she said.
News Source：【CNBC 2020/11/03】