Tuesday, 3 December 2019
Department of Finance
There is no proposal currently under discussion with regard to a minimum effective corporate tax rate within the European Union. As the Deputy will be aware however, discussions on the concept of minimum effective corporate tax rates are currently underway at the OECD as part of wider work looking at the tax challenges of digitalisation. The discussions at OECD will likely feed into future debates at EU level.
It is important to note that the OECD discussions remain on a "without prejudice" basis and that a lot of work remains to be done before any agreement on any aspects of the proposals.
I have been very clear that further change to the international tax framework is necessary to ensure that we reach a stable global consensus for how and where companies should be taxed. A certain, stable, and globally agreed international tax framework is vital to facilitate cross border trade and investment.
I believe that proposals examining the issue of where companies generate their value and whether new concepts of value creation need to be recognised, could provide a basis upon which a sustainable agreement could be found at the OECD. However, separate proposals on minimum effective tax remains problematic, not least because of a lack of clarity as to what it is the proposals are trying to achieve.
I am supportive of measures to limit companies’ capacity to engage in aggressive tax planning. Artificial profit-shifting for tax purposes poses a real challenge and must continue to be addressed. However, I do not support measures which have as their core objective the end of legitimate and fair tax competition. The benefits of tax competition have long been recognised by the OECD and others. I believe that fair tax competition is a legitimate tool for small peripheral countries to balance against size, geographical location or resource advantages other countries enjoy, and this is supported by a wealth of economic research.
Ireland is positively engaged in the discussions at the OECD and remains open to solutions which respect our right to compete fairly and which respect the legitimacy of Ireland’s longstanding 12.5% corporate tax rate.