The introduction of a 15 per cent minimum taxation rate for large companies is expected to have a detrimental effect on Ireland’s revenues, Taoiseach Micheál Martin has said, after European Union countries reached a deal to implement the reform.
“Some people are forecasting that the broader package could lead to a cost to Ireland overall,” Mr Martin said.
The minimum rate, known as Pillar Two of the OECD international taxation reform, is to be applied to “multinational and domestic groups or companies with a combined annual turnover of at least €750 million”, according to a European Council statement. EU countries agreed to write the minimum rate into national law by the end of 2023, according to the statement.
Mr Martin suggested that Pillar One, a reform currently still under negotiation that would make revenues taxable according to where multinationals have their business activities and earn profits, could increase revenues to Ireland.
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“Pillar One could give an uplift in revenue terms,” Mr Martin said. But he suggested this may not be sufficient to offset the impact of Pillar Two.
“It’s the Pillar Two side probably would have more impacts on Ireland, revenue wise, maybe then Pillar One. The second part of that package [Pillar 1] isn’t through yet. But this part of the package could potentially mean an increase in revenue, but not a huge amount.”
Mr Martin said the “exact timelines” about when the 15 per cent rate would come into force still needed to be worked out.
An announcement earlier this week that a deal had been reached on the 15 per cent minimum rate was thrown into doubt after Poland expressed last-minute concerns, and pushed for the implementation of the two pillars of the reform to be linked together because there are still doubts about whether Pillar One can pass Congress in the United States.
But negotiations between the EU members states ultimately persuaded Poland to back down on Thursday night, allowing for a number of files to be finalised before the Christmas break, including the provision of €18 billion in emergency financing for Ukraine.
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CEO of An Post David McRedmond joins Ciaran Hancock to discuss the ongoing row between An Post and the UK’s Post Office over the implementation of post-Brexit customs rules, which is resulting in thousands of online purchases being returned to British retailers. Later on, we hear from two Dublin city centre business owners, Stephen Kennedy of Copper+Straw cafe and Sean Crescenzi of Happy Endings restaurant. They speak about the impact that anti-social behaviour and drug dealing, in and around Aston Quay, is having on their businesses and the immediate and long-term solutions they would like to see implemented to address the issue.
As leaders met in Brussels for the final European Council of the year, some pushed for a new joint borrowing programme to support European green technology companies, to counterbalance large subsidies set to be introduced in the United States in its Inflation Reduction Act that some capitals fear will make EU industry uncompetitive.
Mr Martin acknowledged that European industry was at a “competitive disadvantage” due to high energy costs. But he suggested the EU should use existing unspent grants and loans to provide support rather than starting a new borrowing programme, using its REPowerEU plan which is designed to reduce dependency on Russian fossil fuels.
There’s “a lot of disagreement” about the idea of a new borrowing programme, he continued, saying there was little chance for a deal on this in the “short term”.
“We’ve moved from a situation where a previous US administration was in denial about climate change to a US administration that is now investing hugely in clean tech,” he said. “There are positives in that. And the chance I think Europe should match that on the clean tech side.”
