Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

On 8 October, Ireland joined 135 other member jurisdictions of the OECD framework in reaching a two-pillar agreement to address the tax challenges that have arisen from digitalisation. Pillar 1 will see a reallocation of a portion of the income of very large companies from source jurisdictions to market jurisdictions. Pillar 2 will introduce a global minimum effective tax rate of 15% on businesses with a global turnover of greater than €750 million.

It is important to note that 95% of the companies operating in Ireland are outside the scope of this agreement and will continue to be subject to a headline corporate tax rate of 12.5% on their trading profits. I take further comfort from assurances from the European Commission that it plans to propose a faithful implementation of the OECD agreement within the European Union.

As regards the suggestion that companies currently pay far less than the 12.5% headline rate, I remind the House of the published statistics of the Revenue Commissioners, which show that for the year 2019, the most recent period analysed, companies paid an effective corporate tax rate of 10.3%, with foreign-owned multinationals paying an even higher rate. While this is below the headline corporation tax rate of 12.5%, it is relatively close when compared with many of our competitors, and this close alignment of Ireland's headline and effective rates contributes to the tax certainty which so many investors say is an important factor in choosing to locate operations here in Ireland.

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