Impetus develops in Government towards joining OECD tax deal

Success reported on having sticking-point phrase ‘at least 15%’ removed from draft text

Minister for Finance Paschal Donohoe who is in Luxembourg for meetings with European finance ministers. Photograph Nick Bradshaw/The Irish Times

Momentum is growing in Government towards a decision to join the Organisation for Economic Co-operation and Development (OECD) agreement on a minimum corporate tax rate of 15 per cent.

It is understood that the Government has been successful in having “at least 15 per cent” – which led to fears in Dublin that the minimum rate could be higher – removed from the draft text of the OECD.

The Government's focus is now on securing assurances from the European Commission about how it will seek to enshrine the minimum rate in European law. Minister for Finance Paschal Donohoe, who is in Luxembourg for meetings with European finance ministers, has also had several meetings with members of the commission in recent days.

Taoiseach Micheál Martin is in Slovenia for a meeting with EU leaders, where the subject is also likely to be discussed. Sources believe the Government has received encouraging signals from the commission, that it will look to transpose the OECD text into an EU directive without seeking to alter its terms or increase the minimum rate to a higher level for Europe. However, further contacts are expected on this issue on Wednesday.

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There is now widespread expectation that the Government will be in a position to sign up to the OECD-led agreement when it meets Thursday, according to several ministers and officials.

On Tuesday, Minister for Climate Change and Green Party leader Eamon Ryan said he was “hopeful and confident” that the State would be able to sign up to the plan this week. Two other Ministers, speaking on condition of anonymity, said they expected the Government to give the go-ahead to the move this week, though Mr Donohoe has not yet briefed his Cabinet colleagues on the issue, as contacts with the OECD and commission are ongoing.

Meanwhile, there was annoyance in Government when French finance minister Bruno le Maire signalled that the Republic had moved its position on the 12.5 per cent rate.

In remarks to journalists, Mr Le Maire said and that the minimum taxation rate was no longer a significant sticking point as negotiations intensify towards a key OECD meeting on Friday on the issue.

“I welcome the evolution of the Irish position, in particular on Pillar 2,” said Mr Le Maire, referring to the part of the draft agreement that sets out a minimum 15 per cent corporation tax rate.

"A compromise can be reached on a rate of 15 per cent," he added. "It is not the rate that poses the most difficulties today. We see that Ireland is in the process of evolving on this subject, and that a compromise can emerge around 15 per cent as the real effective rate. I repeat, contrary to popular belief, this is no longer the most important sticking point."

Assurances required

Asked in the Dáil about Mr Le Maire’s remarks, Minister for Foreign Affairs Simon Coveney said “the French finance minister can say whatever he wants” but the Government did not yet have a recommendation on which to base any decision.

Several sources said that they expected that the assurances the Irish Government requires from the commission will be supplied in order to get the agreement over the line. “I would be confident on the commission,” one source said. “But still not quite there.”

Another source said that senior commissioners, including economic commissioner Paolo Gentiloni, are keen to see an OECD agreement reflected as soon as possible in an EU directive and may thus indicate they will not try to introduce changes.

Negotiations on the agreement are continuing ahead of Friday’s meeting with several key issues outstanding. Among these are the amount of profit which will be exposed to tax in a country where sales are made – a pivotal point of exposure to the Irish exchequer. Ireland will also be hoping for rules that allow continuation of incentives to invest in research here for big companies. It is unclear whether an agreement can be reached at Friday’s meeting, with the possibility of talks continuing into October.

Pat Leahy

Pat Leahy

Pat Leahy is Political Editor of The Irish Times

Naomi O’Leary

Naomi O’Leary

Naomi O’Leary is Europe Correspondent of The Irish Times

Cliff Taylor

Cliff Taylor

Cliff Taylor is an Irish Times writer and Managing Editor