Bernard Durkan (Kildare North, Fine Gael)
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251. To ask the Minister for Finance the extent to which corporation tax changes are likely to impact on this country’s future; and if he will make a statement on the matter. [29080/24]

Jack Chambers (Dublin West, Fianna Fail)
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As the Deputy is aware, Ireland joined with almost 140 other countries in reaching agreement in October 2021 on how to address the tax challenges arising from digitalisation of the economy.

The agreement contains two pillars.

Pillar One will see the allocation of taxing rights away from countries such as Ireland to countries where consumers and markets are based. It will be implemented via a Multilateral Convention, on which work is well advanced at the OECD. It is expected that this important international agreement will be brought before the Oireachtas in due course in advance of its ratification.

Ireland agreed to Pillar One even on the basis that the current rules, which were first agreed a century ago, must change to reflect how modern businesses can have a presence and make profits in foreign markets without necessarily having a physical presence there.

Pillar Two came into force on 31 December 2023 in many jurisdictions including Ireland, introducing a 15 per cent effective minimum tax rate for MNEs with a turnover of above €750 million per annum.

These rules have been years in the making and we believe that they have the potential to bring much needed stability to the international tax landscape. While the agreement will come at a cost to Ireland it is clear that a more settled international tax environment will benefit taxpayers and administrations alike, allowing countries to focus on safeguarding competitiveness and providing a sound and stable platform for future investment.

The international tax system needs to keep pace with changes in how business is conducted internationally, and the agreement achieved at the OECD is a fine balance that provides the certainty and stability required for economic growth while at the same time protecting the interests of small countries such as ours.

Bernard Durkan (Kildare North, Fine Gael)
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252. To ask the Minister for Finance if he remains satisfied that our taxation system is sufficiently broadly based to avoid dependency on any one sector to such an extent that it might become a threat to the economy; and if he will make a statement on the matter. [29081/24]

Jack Chambers (Dublin West, Fianna Fail)
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My Department publishes the Annual Taxation Report on an annual basis in order to provide a strategic perspective of the Irish tax system. This allows for the monitoring and identification of developing trends in tax revenue to minimise fiscal vulnerabilities. The latest such report, which was published in August last year, examined the high level of concentration within the corporation tax base, including concentration at a sectoral level: the corporate tax base is highly reliant on a small number of highly profitable companies in a small number of highly profitable sectors.This concentration presents a clear vulnerability to our public finances. Estimates from my Department show that around half of the corporation tax yield in 2023 was ‘windfall’ in nature i.e. not linked to the domestic economy and subject to exceptional potential volatility.Government has acted to mitigate the exposure of our tax base to windfall revenues, through the establishment of two new long-term funds, the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, that will invest these receipts to help fund the response to future structural fiscal challenges that we know are on the horizon.

Ultimately, the best way to ensure the sustainability of the tax base is by continuing to pursue and a balanced and sensible budgetary policy.