Minister for Finance Paschal Donohoe has warned that Ireland could lose up to €2.2 billion per year under the corporation tax reform which was agreed by G7 finance ministers on Saturday.
Although accounting for nearly a fifth of Ireland’s corporate tax revenue, Donohoe assured that it was already built into the government’s economic assumptions. This comes as finance ministers from the Group of Seven leading industrialised nations stated that they would back a minimum corporation tax of 12.5% as well as putting in place measures that would ensure the taxes were paid.
Donohoe, who was present at the meeting for his role as President of the Eurogroup of eurozone finance ministers, stated that his officials had already modelled the impact that the tax will have on Ireland.
Donohoe also assured that Ireland would be an attractive location for foreign direct investment even after the tax reform is implemented while noting that there has been new foreign investment in Ireland this year despite the Covid-19 pandemic. “The tax environment that is developing at the moment is one that the multinationals are evaluating at the moment. The reason that I’m very positive about our country’s future and our economy is twofold.”
A detailed agreement is to be finalised by the Organisation for Economic Co-operation and Development (OECD) in the coming months before the tax reform comes into effect. The Finance Minister stated that he will continue to argue for Ireland’s 12.5% corporate tax in negotiations with EU member states and the United States, stating that he is going to “make the case for legitimate tax competition within certain boundaries and for the role of small and medium-sized economies in the agreement that is yet to come.”
The G7 deal is to be taken up at a G20 meeting that will take place in Venice in July with hopes that it will be approved by autumn with the EU Economy Commissioner Paolo Gentiloni saying, “The chances of a global deal have significantly increased,”.