Michael Cahill (Kerry, Fianna Fail)
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552. To ask the Minister for Finance to review as a matter of priority the taxation system, given the pressure that will be brought to bear by the USA tariffs (details supplied); and if he will make a statement on the matter. [18669/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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There appears to be two separate concerns raised by the Deputy's question. The first is the potential for pressure to be brought upon the international corporate tax system by US tariffs and the second suggests that our domestic tax system could be streamlined.

The current geopolitical context is evolving and now more than ever it is crucial for Ireland to continue offering a stable, business friendly environment which provides taxpayers certainty and a competitive, pro-growth tax offering. Multilateralism is at the centre of Ireland's approach to the on-going challenges in international tax cooperation.

Ireland has been to the fore in fully engaging with international tax norms for some time now going back to the original OECD BEPS project in 2013 and joined the global majority in signing up to a two-pillared solution to the tax challenges arising from the digitalisation of the economy at the OECD. I note the decision of the US Administration in relation to the OECD agreement and the presidential memorandum issued on 20 January. This is of course a regrettable decision, but opportunities exist to engage with the new administration to explore a path forward and discussions are on-going.

Ireland welcomes commencing work on EU-level decluttering and simplification in the direct tax space, and the opportunity to look holistically and critically at the EU tax rules and legislation, especially in light of recent global reforms, and see where we can simplify them, in order to enhance EU competitiveness and prosperity.

Domestic simplification is also important in this environment and the Programme for Government sets out a number of commitments including to the maintenance of a broad tax base while implementing progressive changes in taxation as the economy allows, supporting innovation and entrepreneurship and maintaining competitiveness.

In the area of corporation tax, this year has seen the introduction of a participation exemption for foreign dividends, a measure that will greatly simplify cross-border double tax relief, and work will take place this year to consider expanding the geographic scope of the rules.

A review of the tax treatment of interest in Ireland is underway – a public consultation held to gather valuable stakeholder input has recently concluded and responses are being considered to allow me to update and enhance the existing rules.

The R&D Tax Credit is also being reviewed to ensure that it remains an important part of our competitive offering. A consultation process launched recently and I encourage all interested parties to engage and ensure that their perspectives are understood as these policies are developed.

I note that the Deputy mentions Vehicle Registration Tax (VRT) among other measures in putting forward his argument for a streamlining of the tax system. I would contest that all measures in our tax system are based on solid rationale, each with their own merits and will use VRT as an example.

VRT is assessed on a vehicle at the time of its registration, and the way in which the tax is calculated depends on the category of vehicle involved. The existing vehicle tax structures in the State have a strong environmental rationale, with more pollutant vehicles paying higher rates of tax. VRT is structured to incentivise the uptake of cleaner, low emission vehicles in order to reduce transport emissions, improve air quality and develop a more sustainable transport network. The Deputy will be aware vehicle taxation policy is considered in the context of the annual Budgetary cycle which includes the presentation of policy options to the Tax Strategy Group. The consideration of policy options takes account of a wide range of issues including climate action commitments, social policy and economic impacts.

My government welcomed the publication of the report by the Commission on Taxation and Welfare in 2022. The Commission considered how the overall balance of taxation might shift to sustainably fund public services over the longer-term. It has provided a clear direction of travel for this and future governments around how the sustainability of the taxation system may be improved.

The pressures on tax systems globally are multifaceted and require ongoing cooperation at the global level to ensure that we can deliver on the stability and certainty required to support growth and deliver on a fair and equitable system of taxation for all. We remain hopeful that there will be a path forward which will achieve those aims and Ireland will continue to lend our support to finding solutions at every opportunity.