Ireland needs ‘absolute certainty’ before signing up to tax deal

Michael McGrath says outline of deal not entirely clear at this stage

Ireland needs “absolute certainty” before signing up to an international deal on tax, Minister for Public Expenditure and Reform Michael McGrath has said.

He was speaking as pressure mounts on Ireland to sign up to OECD ( Organisation for Economic Co-operation and Development) plan for a global corporation tax rate of at least 15 per cent.

"At this point, Ireland cannot commit to signing up because it is not entirely clear what exactly we're being asked to sign up to and we do have to protect our national interests," Mr McGrath told an event in Dublin hosted by the Institute of International and European Affairs (IIEA), which was also attended by the EU's economy commissioner Paolo Gentiloni.


Ireland’s 12.5 per cent rate has been the bedrock of the State’s foreign direct investment (FDI) policy, he said.


“If we’re being asked to sign up to an alternative then we need to know exactly what it is and we’re not quite at that point yet,” Mr McGrath said.

Taoiseach Micheál Martin indicated yesterday he would not be making commitments to US companies “one way or the other” on whether Ireland would forgo its 12.5 per cent rate. However, the American Chamber of Commerce Ireland, which represents US companies here, said that if a deal was done, it would be in the Republic’s interests to sign up.

As well as the headline rate, an issue for Ireland is the breadth of the taxable base.

Mr McGrath said there were “ detailed technical discussions” going on behind the public debate “and those include the calculation of the base”.

“While Ireland has a very low headline rate in relative terms, that is applied to a very broad base, many other countries have a higher rate but a narrower base,” he said.

Mr Gentiloni said the two pillars at the centre of the OECD’s reform process – the reallocation of taxing rights and creating a global framework for a minimum rate – would give stability and predictability to the global system.

He said he understood the challenge a global minimum rate created for Ireland. He noted growth is accelerating in Ireland and in the EU, with the expansion in 2021 as a whole likely to exceed the commission’s “already” robust summer forecast.


He said the EU’s Next Generation EU recovery package will see financial support worth a total of more than €800 billion distributed to member states – in additional to the regular EU budget – by 2023.

Ireland will receive approximately €915 million in grants from the package to be used to support investments between now and mid-2026.

Mr Gentiloni said Europe’s response to the economic shock caused by Covid-19 could scarcely have been more different to what happened during the previous crisis, which hit Ireland so hard.

“This time, an unprecedented shock was met with a swift, strong and coordinated common response from the EU institutions,” he said.

“Now we must avoid repeating the mistake of a decade ago when support was withdrawn too soon and too abruptly. We must calibrate very carefully the transition from emergency support to more targeted measures.”

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times