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European Commissioner for the Economy Paolo Gentiloni and Finance Minister Paschal Donohoe in Dublin today.
European Commissioner for the Economy Paolo Gentiloni and Finance Minister Paschal Donohoe in Dublin today.
Image: Sam Boal

Taoiseach says he won't make commitments ‘one way or the other’ to companies about corporation tax rate

The Finance Minister told the European Commission it is “not appropriate” at present for Ireland to sign up to the deal.
Sep 20th 2021, 6:04 PM 17,816 23

Updated Sep 20th 2021, 8:08 PM

TAOISEACH MICHEÁL MARTIN has said he will not be making commitments to “any individual companies” about Ireland’s 12.5% corporation tax rate.

Speaking at a press conference with New York Governor Kathy Hochul at her office in Midtown Manhattan, Martin said: “I am not going to be making commitments one way or the other to any individual companies.”

When asked at a media doorstep with reporters in New York a short time later if he is committed to Ireland’s 12.5% rate, which has been a cornerstone of Irish tax policy for decades, he said: “We are, 12.5% is our rate.”

However, he added that Ireland is engaging in the OECD process in a “constructive way” and there is a “bit of travel to go” in terms of any agreements.

Ireland is one of just nine countries yet to sign up to the OECD (Organisation for Economic Co-operation and Development) framework to reform the global corporate tax regime.

Finance Minister Paschal Donohoe told the European Commission today that Ireland could yet remain outside a global agreement to raise corporate tax levels, 

At a meeting with the European Commissioner for the Economy Paolo Gentiloni in Dublin today, the Finance Minister said it was “not appropriate” at present for Ireland to sign up to the OECD agreement, which is backed by 130 countries.

He said Ireland is seeking further assurances on the predictability and certainty of the agreement, ahead of a mid-October deadline to finalise the deal.

Donohoe said Ireland, which relies heavily on the low corporate tax rate of 12.5%, would take the decision based on the best interests of its economy, and not on external pressures.

Speaking to reporters in New York today, the Taoiseach said Ireland is not in a position to give guarantees when Ireland is in discussions with the OECD process. 

He said the 12.5% rate has been a “key part of our tax policy” for years, and as of yet, Ireland has not agreed to the OECD conclusions that have been arrived at so far. 

“We are engaged in a process, that’s where it stands,” he said. The Taoiseach said companies that he has spoken to are very “understandable” about the process. 

“They understand the OECD process, which we have been a part of since 2013,” he said, adding that it would “not be a surprise to anybody”. 

“I think chief executives are well aware of where this is at,” he said.

Speaking to reporters in Dublin today, Donohoe said: 

“I remain committed to seeing whether the process can yield an outcome that Ireland would be willing to consider joining.

But equally, I have communicated to my colleague that where we are at the moment, of not being in the agreement, is a position that could continue.

“This a very, very important process. It’s a very, very important negotiation.

“I’m very clear that it is not appropriate for Ireland to be in the agreement now.

“That may continue to be the case.

“But equally, we are working very hard to see if an agreement is possible that would allow Ireland to join.”

He said proposals that the corporate tax rate could be set “at least” at 15%, were “deeply problematic” for Ireland.

He added that there would be “consequences” for Ireland whether it joined the agreement, or chose to remain outside of it.

Gentiloni said it was “not the moment” to talk about the potential consequences for Ireland of rejecting the deal.

He added: “This is the moment to cooperate, to continue our dialogue.

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“And to leave to the Irish government, the time, the opportunity, in this discussion with the OECD, to take the right decision in the interest of the Irish citizens.

“Of course, the European Commission position is very clear.

“We believe that having this global agreement would help the stability, predictability of the global taxation systems.

“At the same time, having been in office also at national level, I know perfectly well that the government has to take decisions, considering different aspects of this.”

There are concerns that Ireland’s international reputation could be damaged by remaining outside the OECD framework.

Asked if Ireland would be trusted to senior international positions, such as his own as President of the Eurogroup of finance ministers, should it remain outside a deal backed by 130 other countries, Donohoe insisted any decision would be made solely on the country’s economic interest.

He said: “The critical thing here isn’t so much what our role is in different organisations.

The critical thing is the ability of our economy to grow, to retain jobs, to get new jobs in the future and to continue to be competitive.

“That is the metric through which any decision here has to be evaluated and that is the only lens that I will be using in the decision that I make.”

But Gentiloni said he remains confident that an agreement can be reached.

With reporting by Political Correspondent Christina Finn in New York

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