Pearse Doherty (Donegal, Sinn Fein)
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105. To ask the Minister for Finance to provide an update on the OECD tax agreement and the implications for the Irish tax code and corporation tax rates; and if he will make a statement on the matter. [39433/25]

Pearse Doherty (Donegal, Sinn Fein)
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Ireland signed up to a global tax deal some years ago, back in 2021. It provided for a framework of base erosion and profit shifting. There are now reports that an agreement was reached at the G7, with G7 countries agreeing to exclude US multinationals from certain aspects of the pillar 2 global minimum tax rules. That obviously includes France, Germany and Italy. What are the implications for our existing tax codes that we have legislated for now that it has come through an EU directive?

Paschal Donohoe (Dublin Central, Fine Gael)
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I provided some information on this in my answer to Deputy Nash earlier, so I will just reiterate some of the key points. It will take some time to understand the consequences of this understanding that has been reached between a number of countries and America. The key issue I am concerned about is how this is consistent with the operation of the OECD agreement and the particular issues within that broad framework for me are, first, what this means for the competitiveness of countries and companies that are still inside pillar 2; second, how this side-by-side arrangement will actually happen; and third, how it will be implemented. Engagements in the OECD with regard to this are ongoing. A G20 meeting taking place at the moment may begin to allow us and other countries to understand these issues better.

Pearse Doherty (Donegal, Sinn Fein)
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The G7 is far from democratic but the decisions that are made there can have a serious impact in Ireland. Pillar 2 was dealt with by way of an EU directive. Surely if there are carve-outs as a result, that will require a new EU directive in relation to how France, Germany and Italy will be able to implement this agreement. I have raised the issue with the undertaxed profit rule and how it was envisaged. It was envisaged with America as part of the overall agreement. Can the Minister cast any light on that? We will have to deal with that, or not, in the finance Bill, so that would have to be at an advanced stage at this point. Can the Minister give any indications as to where pillar 1 is? Is it dead or is it on life support?

Paschal Donohoe (Dublin Central, Fine Gael)
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I do not expect pillar 1 to conclude soon given all the difficulties with regard to pillar 2 at the moment. On whether this would automatically lead to a change in the EU directive, I do not believe it will. As I said in response to Deputy Nash earlier, we are considering what this will mean for the implementation of the EU directive and what that means for Ireland’s competitiveness and for Europe’s competitiveness if Ireland and Europe stay inside the second pillar of the OECD agreement while America is co-existing with it but is not in it. I am considering all of this at the moment with my officials. If it requires any change to the finance Bill, we will certainly do that, but at this stage I cannot give the Deputy a definitive answer.

Pearse Doherty (Donegal, Sinn Fein)
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The Minister is not only finance Minister but he also has an important position in Europe as chair of the Eurogroup. Is it his view that France, Germany and Italy are abiding by the OECD agreement? Whatever the G7 does is separate. A global agreement has been reached and Europe is part of it. Have those countries now stepped outside that as a result of the agreement they entered into in the G7 or not? What is the Minister’s view? Has he spoken, maybe in his capacity as chair, to any of those finance ministers to ascertain their views on it? It appears as though they have done their own solo runs in the G7 and left Europe to deal with this issue now, and us too.

Paschal Donohoe (Dublin Central, Fine Gael)
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I believe they are still inside the OECD agreement and pillar 2 and those countries are participating in the OECD reaction to all this and making clear they are committed to the OECD process. Therefore, the answer to the Deputy’s question is that, yes, I believe they are still in it. I have not spoken to EU finance ministers on this particular tax issue in the last number of weeks but it was discussed at the Economic and Financial Affairs Council, ECOFIN breakfast that took place a week ago. At that meeting, most of the finance ministers whose countries were affected by this decision did contribute and in those contributions they made clear they were committed to the OECD framework. However, a lot of issues have now been raised by this for Ireland and Europe. I will spend some time considering them and will answer the Deputy’s questions on that in the time ahead.