Irish Finance Minister Paschal Donohue (pictured) said on Tuesday that Ireland has no intention of raising its corporate income tax rate, which is one of the lowest in the world.
Eurogroup chief also rejected US President Joe Biden’s plan to set a global tax rate “at least” of 15%.
“We have really important reservations about a minimum global tax rate at a level that means only a few countries and some large economies can benefit from this rule,” the minister said on Sky News.
According to the TV station, Donohue expected his country to keep its corporate earnings tax rate at 12.5% for many years to come.
In an interview with Lusa last week, Bashal Donohue argued that “it is really necessary to change” the taxes imposed on multinational corporations, given “citizens’ clear concerns about the way in which taxes are levied on very large companies, ”but cautioned that“ this should be the case ”. The consequences “in Ireland and other” small countries “that are” very open “.
“But we will be ready for this change. Although we have certain opinions and interests that we will defend in the ongoing negotiations, I still believe that it is in our interest to reach an agreement and achieve some stability for this issue for years. To come,” she states.
Pascal Donohue also said that he advocated “the need for legitimate tax competition,” but stressed that “competition must take place within certain limits” and that “what this could mean for Europe’s competitiveness” must be taken into account.
Negotiations are underway in the Organization for Economic Cooperation and Development (OECD), at the initiative of the United States of America, to establish a tax rate on profits of multinational corporations to be coordinated in different countries.
President Joe Biden’s government on Tuesday proposed to its OECD partners setting this “lowest” rate at “15%”, and inviting them to continue discussions, with the aim of “ambition” and “increasing this rate.”
The reform aims to end tax competition between states.
The American project advances when President Biden seeks to raise the American corporate tax rate to finance his massive investment plan.
The Organization for Economic Cooperation and Development, which includes 36 countries, including Ireland, wants to reach a global principle agreement during the meeting of the G20 finance ministers, the so-called G20, which will be held on July 9 and 10, and then at the last meeting in October.
Also Tuesday, the International Monetary Fund (IMF) praised the US proposal to create a “at least” 15% global rate on profits for multinationals, stressing that it allows for more public investment in areas such as education, health and infrastructure. .
“There was a proposal for a rate that could reach 21%. The (final) number should be less,” IMF Managing Director Kristalina Georgieva said in an interview with The Washington Post. He added that any rate higher than the current rate, which in many countries is “10% or less,” would be beneficial.
Georgieva indicated that the International Monetary Fund had supported such an imposition on an international scale for a long time. Why? Because there is no settlement, and there is still less rush to tax evasion, because it means more money in state coffers for investments in education, health, infrastructure, and the digital sector, in all beneficial areas (…) in which we have to invest more. “.
The IMF chief admitted that imposing such a rate was particularly complex, as it is a matter of finding consensus on the “ideal point”, a point beneficial to the international economy and satisfactory to the tax authorities in each country.
The idea of a global tax on the profits of multinational corporations is an old one. The first agreement to launch the initiative was reached in 2015, in Lima, by the Organization for Economic Cooperation and Development (OECD), during the fall meetings of the International Monetary Fund and the World Bank.
Donald Trump’s government blocked the process, but it appears the incoming US president, Joe Biden, wants to speed up the discussions. Last week, Treasury Secretary Janet Yellen announced that she supports a rate of at least 15%.
This rate is expected to be discussed this week and next day during the finance ministers’ meetings
Georgieva emphasized the complexity of the matter, because once the rate was established, it still had to be applied. He commented, “We must support the markets of developing countries, because imposing a tax rate and not imposing it does not solve the problem of public finances.”
The IMF chief also stressed that in international tax reform for other companies, the part on digital clusters is also important. Also, according to the head of the International Monetary Fund, the introduction of global taxes in this sector would be “more effective” and would be “a positive driver of growth” and “fighting inequality.”
The reform of the Organization for Economic Co-operation and Development envisages adjusting the corporate tax according to the benefits accruing in each country, regardless of its financial location.
This second point is specifically aimed at North American groups like Google, Amazon, Facebook and Apple, who often pay taxes in relation to the bills and profits they generate domestically.