Goodbody Stockbrokers has today warned that there are a potentially crucial few days ahead in the issue of corporate tax reform, with Friday stated as the latest deadline for agreement at an OECD level. Ahead of this there are signs that Ireland is inching towards joining the large list of signatories but is not over the line just yet.
Ireland is among a very small number of countries out of the 139 in discussions on the issue that has withheld its support for the communique. As Goodbody noted at the time, this was a risky strategy that risked reputational damage. The Irish government’s main concern was the lack of certainty on the Pillar II reforms, specifically on what the final global minimum tax rate would be. Diplomatic efforts have stepped up over recent weeks in a bid to secure certainty on this point.
It has been suggested that Ireland would sign up to the agreement if it was nailed down at 15% rather than the "at least 15%" that is currently in the communique. A new draft is due to be finalised in the coming days ahead of talks at the OECD at the end of the week. Goodbody believe that Ireland will eventually become a signatory to the OECD reforms, but the ongoing saga in Congress on domestic tax and spending issues may scupper this latest deadline.
According to Goodbody Stockbrokers, "Ultimately, if a 15% rate is indeed settled upon, it would bring Ireland’s longstanding 12.5% rate for large multinationals to an end. At the margin, this is negative for FDI, but must be seen in the context of the higher (and rising in the case of the UK) corporate tax rates in Ireland’s main competitors for this FDI and the positive experiences that large multinationals have had in accessing the EU’s single market. Indeed, ongoing strong levels of FDI into Ireland this year so far suggest that foreign companies still believe Ireland is an attractive place to invest in for the long run."