French minister appeals to Ireland to reconsider corporate tax rate

Beaune advises State not to be seen as ‘reluctant to accept fair taxation’ in an open letter

French minister for European affairs Clément Beaune says a low corporate tax rate is no longer Ireland’s main economic tool or weapon. Photograph: John Thys / EPA

French minister for European affairs Clément Beaune says a low corporate tax rate is no longer Ireland’s main economic tool or weapon. Photograph: John Thys / EPA

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The French minister for European affairs, Clément Beaune, has appealed to Ireland to reassess its opposition to a global minimum corporate tax rate, in a letter published in Tuesday’s Irish Times and in an interview.

“I have lived in Ireland and love your country,” the minister writes. He attended Trinity College Dublin on an Erasmus scholarship in 2000-2001, and has worked for international corporate tax reform for the past four years, first as an adviser to president Emmanuel Macron, more recently as a cabinet minister.

On July 1st, Ireland was one of only nine of 139 countries in the “inclusive framework” at the Organisation for Economic Cooperation and Development (OECD) to reject a draft agreement on international corporate tax reform. The agreement is likely to be approved by the G20 summit in Venice on July 9th-10th. It could be finalised by the OECD in October, and enter into force in 2023.

“Ireland has the means to be part of this dynamic,” Mr Beaune said. “It is also a question of image, not to be seen as reluctant to accept fair taxation.”

Mr Beaune asserted the reform would not endanger Ireland’s prosperity. “International investors have established headquarters in Ireland because it is attractive, developed and stable,” he said. “Ireland is English-speaking, has a qualified labour force and young people from all over Europe have moved to Dublin... a low corporate tax rate is no longer Ireland’s main economic tool or weapon.”

Furthermore, the collection of a higher rate of corporate tax would help to offset any departures from Ireland by multinationals, Mr Beaune added. The OECD estimates that a global minimum rate of 15 per cent would generate about US$150 billion (€126 billion) in additional fiscal revenue worldwide each year.

At a European Council meeting in March 2018, Ireland demanded that the OECD – not the EU – be the forum for global corporate tax reform. “Ireland was hostile to a European agreement, which it said would weaken our competitiveness compared to the rest of the world,” Mr Beaune noted. “But Ireland said it was open to an international agreement. That international accord is here now.”

US Congress approval

The Irish Government is reportedly waiting to see if the US Congress will approve the OECD’s accord before taking a decision. “I understand the logic, but we mustn’t give the impression we are aligning ourselves with the US... it would be an unfortunate signal for the EU if our internal agreement depended on the American position,” Mr Beaune said.

Ireland could in theory veto an EU directive on corporate taxation. That would accelerate a move away from the requirement for unanimity on fiscal matters, Mr Beaune said. “I would like Ireland to reflect on what it would mean to reject what would constitute great progress for Europe.” By participating in the decision, Ireland could help “to define the conditions and rhythm under which this tax takes effect”.

Though Mr Beaune’s letter mentions France’s unfailing support for Ireland throughout the Brexit process, he insists the issues are not linked. “On questions that are essential for Ireland, Europe was there and will be there in any case,” he said. “We proved it during the financial crises. We proved it during Brexit. Each country must be capable of understanding the others.”

Asked if continued Irish opposition to a global minimum tax rate could threaten EU support for the Northern Ireland protocol, Mr Beaune said, “We will not mix up the subject of peace and the subject of taxation... I am convinced that Ireland’s attachment to Europe is greater than a question of economic or fiscal advantage.”