Tuesday, 21 September 2021
Ceisteanna Eile - Other Questions
209. To ask the Minister for Finance the extent to which he and his Department continue to monitor the situation around the proposed corporation profits tax and its potential impact on Ireland's potential to attract investment; and if he will make a statement on the matter. [45155/21]
211. To ask the Minister for Finance the degree to which he expects Ireland’s competitiveness in terms of foreign direct investment to continue notwithstanding any changes in corporation profits tax; and if he will make a statement on the matter. [45157/21]
Amid all the noise on global corporation tax reform and the process, it is appropriate at this stage that the Minister would update the House on his engagement with the OECD on the global corporation tax process. He will be aware from the Labour Party submission to his Department's public consultation process, a process I called for and that I welcome, that our considered assessment is the State should sign up in full to both pillars of the process, including a commitment to a marginally higher minimum effective rate of corporation tax than the 12.5% headline rate we had in operation for the past quarter of a century.
I propose to take Questions Nos. 8, 209, 211 and 227 together.
The 140 members of the OECD's inclusive framework on base erosion and profit shifting, BEPS, continue to work on a two-pillar proposal towards finding a consensus solution to address the tax challenges of digitalisation and globalisation of the economy. Many of the key policy decisions of the two-pillar proposal, including the rate of the proposed minimum effective tax rate, remain undecided.
I have been very clear on my position. I am broadly supportive of the agreement but have a very significant and serious reservation, in particular in respect to a commitment to a rate of "at least 15%" for a global minimum effective tax rate. While I remain very committed to and supportive of the process, that is the reason Ireland is not currently in the consensus. Given the economic importance of the OECD proposals to Ireland, I held a public consultation on the proposals which ran until 10 September. These submissions are now under consideration by my Department. There is a desire for Ireland to be part of the international agreement but, at this stage, there is a lack of clarity on what is in the agreement. The process must bring about certainty and there are too many significant unknowns for now.
Ireland has long been an attractive place for foreign direct investment and has become home to many of the world's largest multinational enterprises. Aside from the headline rate of taxation, there are a significant number of advantages Ireland has to ensure it will continue to be an attractive location for foreign direct investment. As we move forward, I remain committed to engaging in the OECD process but I believe that, in any of the scenarios or horizons Ireland will confront, we will continue to be in a position where we can be competitive and continue to be in a position in which work can be created and jobs created and kept in our country.
I thank the Minister for that reply. I have some appreciation of the situation he is in and I genuinely believe he believes the decision at this stage not to sign up formally to pillar 2 of the process is, as he sees it, in the national interest. We have two different, competing perspectives in terms of what the national interest is. That is informed, I believe, by our different political and economic philosophies and traditions, and I respect and fully understand that.
During our consultation process internally in our own organisation and with academics, business leaders and others, we became convinced that Ireland can live with a marginally higher rate of corporation tax. We are convinced of that and persuaded of that. This is not 1997, when it was first announced by my colleague, the then Minister for Finance, Ruairí Quinn. It is not 2007 either. It is 2021. I think we are in a good position to trade on our strengths, our skills, our productivity and our competitiveness, and not necessarily any longer with a disproportionate focus on what is, by any objective stretch of the imagination, a low rate of corporation tax. I hope the Minister is reassured by remarks made, for example, today, by people like Feargal O’Rourke that we do not have anything to fear in terms of the continued pipeline of investment into Ireland because of our attractiveness as a destination for multinational corporations.
I thank Deputy Nash for his point and I, of course, respect also the judgment he is bringing to bear on this and the view of the Labour Party on it.
The key point I would make to the Dáil this evening, however, is the current text in relation to this agreement contains far too many uncertainties for me to be able to recommend to the Government and then to the Dáil that we should sign this agreement. The Deputy in good faith made the point about a marginally higher tax rate. The phrase at the moment is "at least 15%". I have an understanding of the process that lies behind any agreement within the OECD and how it would be implemented globally and within the European Union. The description of a potential rate as "at least" a figure does not give the confidence and certainty that I need to be able to make a recommendation to this Government.
It is but one of a number of issues and these are issues that I will be working on with the OECD and other international partners across the coming period.
I thank the Minister for further clarifying his position, and that is what I understood it to be.
My preference would have been that the State would have signalled our intention to fully sign up and explicitly support pillar 2 for a range of different reasons. I fear, because of the continued delay in us committing to signing up to pillar 2 - I appreciate the unknowns that the Minister is reflecting on - that will mean that we are coming at this from a position of relative weakness rather than relative strength.
I understand the point the Minister makes regarding a rate of at least 15%. It has been damaging in the sense that we have wasted some opportunities over the last period of time to build alliances to ensure that we may only go to 15% rather than a rate that may be above 15% that might cause the Minister and the Government some difficulty. That is the concern that I have.
What this over-reliance on a very small number of multinational corporations to fund our services reveals is a disproportionate focus on investment of multinational corporations when, in fact, we should be probably focusing more on a new industrial strategy that would allow us to support indigenous Irish enterprise to innovate and go global from Ireland.
At the conclusion of this process, it will be appropriate for me to give a broader perspective on the work that has happened in the OECD, in the European Union and elsewhere in pursuit of our objectives regarding corporate tax policy and the stability of the rate. This is a project that has been going on for a number of years. It is one in which I have been totally involved.
We will get to a point in the coming weeks or months, or maybe beyond that, in which we as a Dáil and as a Government will need to make a very significant decision on an important part of our tax policy. That decision will be whether we enter into or stay out of this agreement. Either decision that we make will carry consequences that the Government and the Dáil will need to be fully aware of.
I would say briefly to Deputy Nash, if I may, that if I had entered the agreement earlier in the process a question that Irish industry and the Dáil would be putting to me is, what I believe the rate will be in the future. As long as it is described as at least 15%, that certainty is not there.