With the OECD’s efforts to agree a global response to corporate taxation apparently rejected by the US recently, Irish Finance Minister Pascal Donohoe appears to be leading the charge not to give up hope in favour of national or EU responses.
In an interview with the Financial Times, Donohoe said he believes that trade tensions are likely to develop if the EU were to take a unilateral approach on this issue, referring to the retaliatory actions of the US to some proposals to tax digital companies in Europe.
Goodbody Stockbrokers warns that Ireland is more than a casual observer on this issue and it has more to lose than most in the EU from the point of view of both tax revenues and employment if FDI flows were to suffer due to an eroding of tax competitiveness or a flaring of trade tensions.
Ireland has already recognised that it is likely to receive less corporate tax revenue in the future as changes are implemented. However, Goodbody warn that the more important aspect is the impact on jobs.
Ireland has been consistent in its view that unilateral changes to corporation tax rules runs the risk of the EU losing this investment in its entirety, not to mention the likely retaliation from the US and its impact on trade and investment.
According to Goodbody Stockbrokers, "With Donohoe in the frame to become the next head of the Eurogroup, he has plenty at stake personally and would play a major role in directing these discussions if he were to be successful. We will know this day next week whether his campaign is successful."