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Monday, October 18, 2021

Changes to corporate tax rate would only affect ‘very large companies’ – Varadkar

Tánaiste Leo Varadkar has stated that if there are any changes to Ireland’s corporate tax rate, it will only affect “very large companies” that experience a turnover of more than €750 million a year.

Companies with a turnover of less than €750 million a year will be subject to the normal corporate tax rate of 12.5%.

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Ireland’s corporate tax rate will remain at 12.5% even if it signs up to a global agreement on a new higher rate.

Ireland joins a handful of countries that are holding out against signing up to an Organisation for Economic Co-operation and Development (OECD) plan, which will increase the corporation tax to at least 15%.

Addressing a Cabinet meeting today, Varadkar stated that two corporation taxes could exist in Ireland, with the 12.5% tax remaining for smaller and mid-sized companies.

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The Tánaiste added that the current discussions only relate to very large companies and therefore, “any agreement we may or may not sign up to won’t impact the average Irish business, won’t impact even any large Irish business, or mid-caps. The 12.5 per cent rate will stay in place for them.”

Varadkar said that other countries want Ireland to sign up for the agreement, which he stated gives Ireland some leverage and negotiating power while adding, “So we want to make sure we’re protecting Ireland’s economic interests,”.

“Bear in mind many countries will benefit from an agreement on international tax, Ireland as a country will lose revenues, so we have to protect our interests, and that’s what we’re going to do.”

Describing Ireland’s current corporation tax rate as a perfect example of where low taxes result in higher revenues, Varadkar said that we don’t want to give that up “but at the same time, we’d prefer to be inside the tent than outside of it.”

IMAGE – PA Images

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