‘Progress’ made in corporate tax discussions as Government receives revised text – Donohoe

Government has been seeking language change over inclusion of ‘at least’ in plan

Minister for Finance Paschal Donohoe had called for the “at least” to be removed to leave clarity on the future rate.   Photograph: Nick Bradshaw

Minister for Finance Paschal Donohoe had called for the “at least” to be removed to leave clarity on the future rate. Photograph: Nick Bradshaw

 

There has been progress in talks to reach a global deal for a 15 per cent minimum corporation tax rate, Minister for Finance Paschal Donohoe has said after receiving a fresh draft of the proposals.

“We are making some progress, but there is a need for further engagement both with the OECD, with the Commission. All of that is under way,” Mr Donohoe said.

“The Government will form a view on this matter later on in the week, and at that point I’ll be in a position then to confirm the Irish position on this important matter.”

Mr Donohoe was speaking at a gathering of finance ministers in Luxembourg which he chaired as Eurogroup president, which was dominated by concerns about rising gas prices but with talks about the taxation reform on the sidelines.

The Department of Finance earlier on Monday confirmed it had received the revised text on the OECD’s corporate tax plan. The Government has been seeking a key change in the language in the plan, which had said that a global minimum corporate tax rate of “ at least 15 per cent” would be introduced. Mr Donohoe had called for the “at least” to be removed to leave clarity on the future rate.

If the Cabinet, which meets on Thursday, is content with the revised text, it is likely to give the green light to Ireland signing up to the OECD plan, which would involve giving up the State’s 12.5 per cent rate. A new rate would be likely to be introduced in 2023, at the earliest. However, the exact detail of the revised OECD text will be vital.

Talks with Vestager

Earlier on Monday Mr Donohoe discussed the taxation talks with the European Commission’s competition and digital chief Margrethe Vestager in Brussels as momentum builds ahead of a Friday meeting of the 140 countries involved in the talks and at which the OECD hopes to clinch the deal.

One point of discussion with Ms Vestager was whether Ireland can retain its 12.5 per cent tax rate for companies with turnover of less than €750 million – which fall outside the OECD proposal – or whether this would disturb EU fair competition rules.

Government sources had seemed confident that Ireland’s case had been heard in the talks, but it remains to be seen what the detail of the revised OECD wording will be. Speaking on RTÉ’s Drivetime, Tánaiste Leo Varadkar said the revised text did respond to “a lot, if not all, of the concerns” of the Irish Government. Sources have indicated that delicate talks have been under way for some time on a wording in relation to the minimum rate.

Assurances sought

Mr Donohoe also met with the economy and trade commissioners Paolo Gentiloni and Valdis Dombrovskis, as the Government seeks reassurances over how any OECD agreement would be transposed into EU law, and amid ongoing tick-tacking with key counterparts over whether the new draft is sufficient to meet Irish concerns. Ireland refused to sign the original draft, mainly because of the wording relating to the proposed minimum rate.

“We have made some progress, but I’ll give my final view about where we stand after I’ve concluded the discussions of this week and had an opportunity to brief all Cabinet colleagues on Thursday,” Mr Donohoe said.

“After we have our Cabinet discussion, I’ll then give a view on behalf of the Government and myself about where we stand on the OECD process.”