Ireland needs “absolute certainty” before signing an international tax deal, Public Expenditure and Reform Minister Michael McGrath said.
He was speaking as pressure mounts on Ireland to join the Organization for Economic Co-operation and Development (OECD) plan for a global corporate tax rate of at least 15 percent.
“At this point Ireland cannot commit to registering as it is not entirely clear what exactly we are being asked to sign and we need to protect our national interests,” said Mr McGrath at an event in Dublin organized by the Institute. of International and European Affairs (IIEA), in which the European Commissioner for the Economy Paolo Gentiloni also participated.
Ireland’s 12.5 percent rate has been the foundation of the state’s foreign direct investment (FDI) policy, he said.
“If we are asked to subscribe to an alternative, we need to know exactly what it is and we are not at that point yet,” said McGrath.
Taoiseach MicheÃ¡l Martin said yesterday he would not make commitments to US companies “one way or the other” on whether Ireland would drop its 12.5% âârate. However, the Irish American Chamber of Commerce, which represents American business here, has said that if a deal is made, it would be in the interest of the Republic to register.
In addition to the overall rate, a problem for Ireland is the extent of the tax base.
Mr McGrath said there were “detailed technical discussions” underway behind the public debate “and these include the calculation of the base.”
âWhile Ireland has a very low overall rate in relative terms, which applies on a very broad base, many other countries have a higher rate but a narrower base,â he said.
Mr Gentiloni said the two pillars at the center of the OECD reform process – the reallocation of taxing rights and the creation of a global framework for a minimum rate – would give stability and predictability to the global system.
He said he understood the challenge that an overall minimum rate created for Ireland. He noted that growth is accelerating in Ireland and the EU, with expansion in 2021 as a whole likely to exceed the commission’s “already” robust summer forecast.
He said the EU’s next-generation EU stimulus package will see financial support worth a total of over â¬ 800 billion distributed to member states – in addition to the EU’s regular budget – by 2023.
Ireland will receive around â¬ 915 million in grants from the package to be used to support investments by mid-2026.
Mr Gentiloni said Europe’s response to the economic shock caused by Covid-19 could hardly have been more different from what happened in the previous crisis, which hit Ireland so hard.
âThis time, an unprecedented shock met with a rapid, strong and coordinated joint response from the European institutions,â he said.
âNow we need to avoid repeating the mistake of a decade ago when support was withdrawn too soon and too abruptly. We need to calibrate very carefully the transition from emergency aid to more targeted measures. “
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