PARIS – An updated plan for a global corporate tax overhaul has dropped “at least” a proposed minimum rate of “at least 15%”, which could remove a major hurdle for Ireland then as negotiations enter their home stretch, sources familiar with the talks said Reuters.
Some 140 countries are aiming to finalize the first major overhaul in a generation of multinational tax rules at a meeting on Friday so that the deal can be approved by the Group of 20 economic powers later this month.
So far, 134 of the 140 countries involved in the talks had supported a minimum rate of “at least” 15%, but Ireland has so far refused to sign for fear the rate will end up being higher than 15%.
Setting a rate of 15% would probably pave the way for the Irish government to join. As a low-tax European home for a number of the world’s largest multinationals, Ireland is seen as the main obstacle in the negotiations.
A source close to the state of the talks told Reuters that the latest text distributed to delegations cut “at least” and another said 15% was practically a “done deal”.
Irish national broadcaster RTE was the first to report that “at least” had been dropped.
The deal does not need to be unanimous, but countries could apply an additional tax of at least 15% on profits recognized in countries that do not support it.
French Finance Minister Bruno Le Maire, who pleaded for a rate above 15%, said on Tuesday that a compromise was possible on 15%.
However, he added that a major sticking point remained as to the extent of a deduction from the overall minimum that should be possible for multinationals based on their assets and payroll in foreign markets.
“It is not the rate that is the biggest problem, Ireland’s position is changing on this subject and a compromise can emerge at 15% as a true effective minimum tax,” Le Maire said.
The minimum rate is supposed to discourage multinationals from making profits in low-tax countries like Ireland, which has a 12.5% ââcorporate tax rate, regardless of where their end customers are. .
However, some countries like Poland and other Eastern European countries want a large deduction from the minimum rate to reflect actual business activity, as they frequently offer reduced rates to encourage foreign investors to build homes. factories.
The Mayor said France supports a deduction that would be based on 7.5% for assets and 10% for payroll over a 10-year transition period.
Once an agreement is reached, governments are expected to enshrine the new rules into their laws next year so that they come into effect in 2023.
(Reporting by Leigh Thomas in Paris and Padraic Halpin in Dublin; Editing by Sudip Kar-Gupta, William Maclean) (([email protected]; +33 1 4949 5143;))