Ireland corporate tax rate
Photograph taken in Dublin (Ireland).
Gergo Kosa | EyeEm | Getty Images
Ireland is signing up to a global tax deal which will raise its corporate rate to 15%. It marks a major shift in the country’s policies.
G-7 nations and G-20 agreed this summer to collaborate to fight tax evasion worldwide and to harmonize regulations. The plan, if implemented, would force multinationals to pay tax where they operate — not just where they have their headquarters — and would impose a minimum corporate rate of 15%.
At 12.5%, the Republic of Ireland offers one of the best rates available for corporations in the world. Previously, it had refused to sign up for the plan. The low rate was vigorously supported by different Irish governments, who claimed it was an incentive to small businesses.
RTE Irish Broadcasting reported Thursday evening that the Cabinet had authorized an increase in corporation tax from 12.5% – 15% for businesses with revenues greater than 750 million euro. The news was later confirmed by Ireland’s Finance Minister, Paschal Donohoe.
RTE reports that the Irish Department of Finance estimates that joining this deal will reduce tax take in Ireland by 2 Billion Euros ($2.3B). According to RTE, a poll conducted by The Irish Times found that most Irish voters believed the government should continue its existing policy.
The revised text was a key factor in Ireland’s decision to change its mind. The initial deal mentioned a minimum corporate tax rate of “at least 15%,” but this has been updated to just 15% — signaling that this rate will not be pushed up at a later date. Ireland received assurances from the EU that the rate would not be increased for those firms with fewer employees.
Speaking to CNBC Wednesday, Péter Szijjártó, minister of foreign affairs and trade for Hungary, said that initial talks mentioned a corporate tax rate of 21%, which is far from the country’s current rate of 9%. The new 15% level is therefore somewhere between the two.
The global tax agreement has not been approved by Hungary. The minister stated that Budapest would prefer to sign if there was a 10-year implementation time.
CNBC’s Wednesday interview with Bruno Le Maire (France’s Minister of Finance), revealed that the minister was a strong supporter for a global tax agreement.one millimeter away“From Being Attained.
He said that the key was to reach an agreement on the international tax system by the end of the month.
He added that “we could either sign the final agreement as part of the international taxation system next week in Washington, or at G-20’s meeting in Rome at end October.”