Mr. Seamus Coffey:

The point is well made. It is not a case of assessing whether the decision is right or wrong. It is more about highlighting the significance of the decision. After nearly 20 years of saying that this rate was a bedrock of economic policy, in a short statement the Minister for Finance will announce a change to the rate. It has not yet been introduced. It was expected to be introduced by 1 January 2023, but implementation agreement at EU level has slowed it down, so it will possibly be next year before that is the case. It is a significant change. Is it the case that the tax will be paid anyway? Possibly, although the Commission does make the point that given the broad base on which Ireland charges the 12.5% rate, it is possible that the effective rate on the base in the OECD agreement would be close to 15% anyway, so there would not be much additional tax. That would be subject to the fine detail of the agreement and how the corporate tax base on which the 15% rate would be assessed would be set.

Deputy Doherty is correct that if there was a phenomenal difference between the 12.5% in Ireland and the 15% at the pillar 2 rate, then the company would have to pay 2.5%, so he asks why we should not just collect it in Ireland. That is the logic of the announcement that was made that the rate would move to 15% and Revenue would collect it here rather than somewhere else. That is a perfectly sound and reasonable logic for something to happen, but if this is a bedrock of our economic policy, we have now signed up to the principle of a global minimum tax and who is to say the rate would not be different? Why in five, seven or ten years' time would there not be a renegotiation, and everyone would come around the table and say they have all agreed to the principle here, now they are just changing the rate, so why not go to 17.5%, 20% or 22.5%?

What is the purpose of pillar 2? Why is it in place? Is it to collect additional tax revenue? Not really. Most companies are likely paying tax rates of 15% or higher on average anyway. While there might be some additional tax revenue, it will not be significant. One of the key impacts that the rate will have is that it will reduce the tax competition smaller countries can use to attract investment. While Ireland might have a 12.5% rate, and the rate in France might be 30%, a 15% rate initially will not make that much of a difference. We will still have a lower tax rate than the likes of France, but if the rate was to increase further, that gap would narrow and the relative attractiveness generated by smaller countries with lower tax rates would be reduced.

What has happened with the OECD agreement is very significant. It should not be just on a whim that we change our tax rate from 12.5% to 15%. That is not to say it is wrong, but it should be something that is subject to careful assessment.