Crunch negotiations are under way on a key part of the text of an international tax plan that has so far been opposed by the State, Minister for Finance Paschal Donohoe has said. It comes amid indications that many of the other countries involved in the OECD talks would support setting the new global minimum rate at 15 per cent. However, the key issue will be finding a form of wording to which the bulk of the 140 negotiating countries will sign up.
If agreement can be reached in the coming days on a form of words that the Government believes offers a reasonable level of certainty, then Ireland is likely to sign up, meaning the end of the 12.5 per cent rate.
The key issue, as referred to on Wednesday by Mr Donohoe, was the reference in the draft text to a minimum rate of “ at least” 15 per cent. The Government is concerned that committing to this could mark the start of an open-ended series of corporate tax hikes. A draft text of the revised OECD agreement is expected in the the coming days, ahead of a scheduled meeting of all countries involved on October 8th.
Seeking certainty
Speaking to reporters in Dublin on Wednesday, Mr Donohoe said he had met with finance ministers from around the world, including US treasury secretary Janet Yellen, at a G7 meeting chaired by UK chancellor of the exchequer Rishi Sunak.
While he attended the G7 meeting in his capacity as chairman of the Eurogroup, Mr Donohoe said he was asked for his view as Irish Minister for Finance on the so-called OECD tax plan and the minimum tax rate proposal.
“In this meeting I again set out the Irish position that certainty in relation to the rate is paramount, and focused in particular on the issue of ‘at least’ and what this means in relation to stability of the rate in the future,” Mr Donohoe said.
“A short while ago, a statement was issued by chancellor Sunak which noted that agreement on this issue now needs to be reached amongst all 140 countries at the OECD inclusive meeting [on October 8th].
“I expect I will be receiving an updated text on that agreement from the OECD in the coming days, and at that point the Government will consider that text,” he said.
Increasing support
Sources believe there are increasing indications of support at the OECD talks for a 15 per cent rate and a willingness to drop the “at least” phrase. However, some other countries may not want to close off the possibility of future increases, and negotiations are ongoing on a form of words that would keep everyone on board and get Ireland to sign up.
A problem for Ireland, where US multinationals are major players, is that the OECD process is coming to a head while it is still unclear what tax plan will be passed by the US Congress.
However, as the US Congress may support a rate of just over 16 per cent on the international earnings of American companies, US support for setting the OECD rate at 15 per cent may emerge. Previously the Biden administration had pushed for a higher rate of tax on US companies.
Sources believe that the vital draft text from the OECD – an update on an outline plan published in July – may emerge on Friday or over the weekend. Negotiations have continued on a range of contentious issues as the October 8th meetings approaches.
