Ireland’s finance minister has aired “significant reservations” about US President Joe Biden’s global tax scheme, predicting that Dublin will keep its rates well below the minimum set out by the US proposal for years to come.
Finance Minister Paschal Donohoe said he has not been persuaded by Biden’s planned overhaul of the global corporate tax system, which would set a minimum 15% rate worldwide, telling Sky News on Tuesday that Ireland is unlikely to go along.
“We do have really significant reservations regarding a global minimum effective tax rate status at such a level that it means only certain countries, and certain size economies can benefit from that base – we have a really significant concern about that,” Donohoe said, adding that he expects Ireland to retain its 12.5% corporate rate over the next decade.
I absolutely support and will be making the case for our 12.5% tax rate. I believe a rate like that – a low rate – should be a feature of an agreement in the future.
While Biden’s plan will look to push corporate tax rates in the US from 21% to 28%, the administration is also seeking agreement on a global 15% minimum in an effort to clamp down on tax havens, which attract businesses from all over the globe due to their low tax burden. Though the original US proposal suggested a 21% floor, which earned nods from Berlin and Paris, a new plan announced last week cut the figure down to 15% – still higher than Dublin’s rate, among the lowest in the developed world.
“Our friends and partners in the United States understand our concerns in these matters, but the best kinds of partnerships – the best kinds of friendships – are ones in which you can talk about these matters openly and engage with each other, professionally, and that’s what we’re going to be doing,” Donohoe went on.
The minister’s comments follow reports that the G7 countries are close to an agreement on the taxation scheme, though Ireland’s stance is likely to make waves at a financial meeting between the group of nations in London set for June 4 and 5. The tax plan is also expected to be debated in more detail at an upcoming Organization for Economic Co-operation and Development (OECD) summit later this year.
While officials in Germany, France, Canada, Italy and Japan have signaled support for Biden’s plan, Britain has so far withheld its endorsement. However, at an event hosted by the Wall Street Journal earlier this month, the UK’s treasury chief Rishi Sunak said London is “open” to the idea, so long as all parties can agree to a “multilateral solution that divvies up international taxing rights in a fair, appropriate manner.”
“The devil will be in the detail,” Sunak said.
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