Ireland was among only 9 nations that yesterday refused to sign an agreement that will result in wide-ranging changes to the rules around the taxation of multinationals. Goodbody Stockbrokers today warned that along with only two other European states and some small tax havens and African states in doing so, it is surely risking some reputational damage.
An agreement was signed yesterday by countries that account for more than 90% of global GDP. Having held out earlier, Goodbody say it is notable that China and India were signatories to the deal. Irish Finance Minister Paschal Donohoe noted in a statement yesterday that while Ireland agrees with Pillar 1 of the statement on the issue of the distribution of profits of multinationals across jurisdictions, it continues to have issues with Pillar II – that of a global minimum tax rate of at least 15%.
While Ireland has said that it remains committed to the process of finding an outcome, it did not, in public at least, offer any potential solution to get it on board.
A final agreement is expected to be reached by October. Goodbody say the Irish government may use this time to prepare the public for changes that now seem inevitable and that an important message will be that Ireland’s corporate tax rate will remain competitive in the context of significantly higher rates in most of the rest of Europe.
According to Goodbody Stockbrokers, "Having been committed to process of international negotiation and cooperation on this issue, Ireland finds itself between a rock and a hard place by holding out on an agreement that most of the world has signed up to. Ireland has clearly been trying hard to negotiate the global minimum tax rate downwards and has been largely successful regarding both the headline rate and the carve-outs that were part of the statement yesterday."