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Finance Minister Michael McGrath said the new tax rate will be legislated for in the Autumn Finance Bill and will take effect from 1 January 2024. Alamy Stock Photo
Corporation Tax

15% corporation tax rate for large multinationals to be introduced from next January

Finance Minister Michael McGrath confirmed that he will bring a memo to Cabinet this week to introduce the measure.

FINANCE MINISTER MICHAEL McGrath has confirmed that he will bring a memo to Cabinet this week to introduce the new 15% global corporate tax rate for multinational companies in Ireland next January.

Ireland agreed to join the Organisation for Economic Cooperation and Development (OECD) framework for a global rate of 15% tax in October 2021.

The agreement introduces two distinct pillars to be implemented.

Pillar one sees a reallocation of a proportion of profits to the jurisdiction of the consumer.

Pillar two sees the new global minimum effective tax rate apply to multinationals with global revenues in excess of €750 million.

Speaking on RTÉ’s This Week programme, McGrath said a qualified domestic minimum top-up tax of 2.5% will be applied to large corporations with a turnover of at least €750 million. 

It is understood that the lower rate of 12.5% will continue to apply for businesses earning less than this amount. 

McGrath said the new tax rate will be legislated for in the Autumn Finance Bill and will take effect from 1 January 2024. He also said a feedback statement in relation to consultation was published on Friday.

“It’s a very detailed, complex piece of work. We published indicative aspects of the legislation that will be required, so it is going to be a very complex Autumn Finance Bill to underpin what is the historic change in relation to Ireland’s corporate tax regime,” he said.

McGrath said there will be a reallocation of taxing rights under pillar one of the agreement. 

“When my department over the last couple of years looked at the impact of the two pillars in the round, it is pillar one – the reallocation of taxing rights – that ultimately will result in a negative impact in Ireland because of the small size, relatively, of the domestic market here,” he said.

He said pillar one is less advanced than pillar two and that it is still the subject of very detailed discussions and negotiations at OECD level.

“Ireland is at the table. We are very much involved in helping to shape the nature of those discussions and indeed the direction of the emerging conclusions, so it remains to be seen when there will be final agreement in respect of pillar one.”

McGrath added that pillar two could come into effect before pillar one. However, he said that it remains the department’s assessment that there will be “an impact on receipts in Ireland”. 

“It’s not that we will receive less receipts in the future, but the increase in the receipts that we forecast will be of a lower magnitude when the full suite of pillar one and pillar two measures are implemented in full over the years ahead.”

Energy prices

Separately, the Minister for Finance said he expected to see lower wholesale energy prices passed on to consumers “in the coming months”. 

“The sooner the better because it has contributed in a very significant way to the level of inflation we’ve experienced, to the pressure that so many households and so many businesses are under,” he said.

“We have seen a dramatic reduction in wholesale gas prices, for example, and I do think that it is now time for the companies concerned to pass on those reductions to the customers because we are seeing inflation in non energy areas, in particular groceries and food items remain quite high, and that is what is resulting in people continuing to be under pressure.

“Given the dramatic improvement in the wholesale market conditions and energy, the sooner we see those reductions passed on the better, and I certainly want to see that.”

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