Written answers
Wednesday, 8 November 2023
Department of Finance
International Agreements
Barry Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source
31. To ask the Minister for Finance if he still considers the implementation of Pillar 2 to be a global project, given US Treasury Secretary Yellen's comments; how she communicated same to him and the Minister for Public Expenditure,National Development Plan Delivery and Reform and president of the Eurogroup at the Ecofin meeting which he attended; the matters for the OECD and the US that remain unresolved; and if he will make a statement on the matter. [48874/23]
Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source
First of all I believe that it is important to clarify that the comments made by Secretary Yellen which the Deputy refers to did not suggest that Pillar Two will not be a global project.
At the meetings in Luxembourg, Secretary Yellen confirmed there are open issues in relation to Pillar One of the OECD agreement, which concerns the reallocation of taxing rights, and which will delay the US signing up to that aspect of the agreement into next year. The comments did not relate to adoption of the global minimum tax under Pillar Two.
As home to many of the world’s largest MNEs, the United States are an integral part of the implementation of the global minimum tax. The US introduced the first global minimum tax, the Global Intangible Low-Taxed Income (GILTI) rules, through the Tax Cuts and Jobs Act in 2017 and these were recently supplemented by a Corporate Alternative Minimum Tax (CAMT). However, due to differences in base, rate and scope, these taxes are not currently aligned with the GloBE rules.
The co-existence of the US’ “alternative minimum tax regimes” with the GLoBE rules has been has been one of the many technical issues addressed in the OECD negotiations. The system adopted allows for an integrated application of the GloBE and GILTI rules on an interim basis, allowing for the application of the QDTT in priority while not giving rise to double taxation for business through appropriate crediting mechanisms. This is a significant positive for Ireland and provides stability for businesses as the rules are implemented globally over the coming years.
Ireland signed up to the OECD two-pillar agreement in October 2021 and we intend to follow through on that commitment. Our long-standing position is that the international tax system needs to keep pace with changes in how business is now being conducted globally. All EU Member States are legally bound to transpose the EU Minimum Tax Directive, and bring the primary rules into effect, by 31 December 2023. Preparations to transpose the Directive in Ireland are advanced with draft legislation included in the recently published Finance Bill.
No comments