Taoiseach Micheál Martin sparked uncertainty over Ireland’s corporation tax rate on Monday night – after declaring he’s ‘not going to be making commitments’ over the low rate.
Ireland is among a handful of nations that have not signed up to an OECD global corporation tax agreement – a deal being spearheaded by Joe Biden.
Irish governments have long fought to protect the country’s 12.5% corporation tax, which has been a primary driver of foreign direct investment in the country for decades, particularly from American companies.
However, speaking at a press conference in New York with the city’s governor, Kathy Hochul, on Monday, Mr Martin cast doubt over maintaining Ireland’s current rate. ‘I’m not going to be making commitments one way or the other to any individual companies,’ Mr Martin said.
Speaking to reporters following the press conference, he said that Ireland wanted ‘certainty’ and ‘continuity’.
‘We’re in negotiations at the moment. We are, I mean, 12.5% is our rate, but there’s discussions underway within the OECD,’ he said. ‘So we have made it very clear from the outset that we are engaging in the OECD process in a constructive way and we want certainty, and we want continuity.’
When questioned as to why he could not guarantee the 12.5% rate, he replied: ‘We are not in a position right now when we’re in discussions – we’re involved in a process, this isn’t about guarantees around specifics.’
Earlier, Finance Minister Paschal Donohoe appeared to be leaning towards rejecting lowering our rate but was equivocal when he said the Government will act in the ‘national interest’ when deciding if Ireland will sign up to a corporate tax deal that proposes to create a minimum 15% corporate tax rate globally.
After a meeting with the European Commissioner for the Economy Paolo Gentiloni in Dublin on Monday, Minister Donohoe said it was ‘not appropriate’ at present for Ireland to sign up to the OECD agreement, which is backed by 130 countries.
He said Ireland is seeking further assurances on the predictability and certainty of the agreement, ahead of a mid-October deadline to finalise the deal.
Committing to a minimum corporate tax rate of at least 15% ‘is deeply problematic for Ireland’, said Mr Donohoe.
Less wavering than Mr Martin, he said: ‘I’m very clear that it is not appropriate for Ireland to be in the agreement now. That may continue to be the case. But equally, we are working very hard to see if an agreement is possible that would allow Ireland to join. I will be assessing what is in the national interest of our country in the coming weeks and I will make a recommendation at that point.’
The minister said that Ireland remained ‘engaged in an awful lot of discussion’ to see if an agreement could be reached.
‘I remain committed to seeing whether the process can yield an outcome. Ireland would be willing to consider joining,’ he added. However, Mr Donohoe said he has communicated to Cabinet colleagues that they may remain outside the deal.
‘I’m very clear that it is not appropriate for Ireland to be in the agreement now. That may continue to be the case, but equally, we are working very hard to see if an agreement is possible that would allow Ireland to join,’ he explained.
Mr Donohoe said the negotiation process was ‘very important’ but that any decision to join or opt out of any deal would have ‘consequences’ for Ireland.
Mr Gentiloni said it was ‘not the moment’ to talk about the potential consequences for Ireland of rejecting the deal.
‘This is the moment to cooperate, to continue our dialogue. And to leave to the Irish Government, the time, the opportunity, in this discussion with the OECD, to take the right decision in the interest of the Irish citizens.
‘Of course, the European Commission position is very clear. We believe that having this global agreement would help the stability, predictability of the global taxation systems.’
There are concerns that Ireland’s international reputation could be damaged by remaining outside the OECD framework.
Asked if Ireland would be trusted to senior international positions, such as his own as president of the Eurogroup of finance ministers, should it remain outside a deal backed by 130 other countries, Mr Donohoe insisted any decision would be made solely on the country’s economic interest.
‘The critical thing here isn’t so much what our role is indifferent organisations. The critical thing is the ability of our economy to grow, to retain jobs, to get new jobs in the future and to continue to be competitive,’ he said.
‘That is the metric through which any decision here has to be evaluated and that is the only lens that I will be using in the decision that I make.’Internet Explorer Channel Network