LAST UPDATE | 8 Oct 2021

THE ORGANISATION FOR Economic Cooperation and Development (OECD) has announced that 136 countries have agreed to impose a global minimum tax rate on corporations of 15% following years of negotiations on the far-reaching reform.

“This is a major victory for effective and balanced multilateralism,” said OECD Secretary-General Mathias Cormann in a statement after Ireland, Hungary and Estonia joined the deal, leaving Pakistan, Nigeria, Kenya and Sri Lanka as the last holdouts.

Welcoming the news, European Commission Vice President Valdis Dombrovskis said it was a “historic moment for global taxation”.

A historic moment for global taxation!
I welcome excellent news from @OECD on agreement on minimum corporate rate internationally

✅halts ‘race to the bottom’ on global tax
✅fairer tax paid by companies wherever they operate
✅stops harmful competition on tax between countries https://t.co/PF7Pi09HJu

— Valdis Dombrovskis (@VDombrovskis) October 8, 2021

Cabinet yesterday agreed to sign up to the OECD proposals after the government risked seeing the country amongst a handful of states that would not agree to the minimum tax deal.

The proposals were approved by the G20 group of large economies in July and Ireland became the 135th out of 140 OECD countries to sign up.

Ireland did not sign up the plans in July with Finance Minister Paschal Donohoe stating that the government first wanted greater certainty about future rates.

Ireland’s approval removed a key stumbling block to the global efforts and the G20 leaders are expected to formally sign off on the deal when they meet in Rome in late October.

Finance Minister Paschal Donohoe this evening welcomed the agreement reached by the OECD. 

Donohoe said that following the agreement, Ireland will continue to be an attractive location for multinational enterprises.

“The agreement reached at the Inclusive Framework demonstrates the importance of working together to achieve positive outcomes for the world,” Donohoe said. 

“This landmark agreement will address global tax challenges of digitalisation and provide the certainty and stability that large business and Government need,” he said. 

Donohoe continued: “In July, while I indicated I was broadly supportive of the agreement, I sought additional clarity in relation to key aspects of the agreement, notably ‘at least 15%’.

“Today’s agreement provides that clarity including a set minimum effective tax rate of 15% will apply to our multinational enterprises.

“Ireland’s long-standing corporation tax rate of 12.5% will continue to apply to the vast majority of our businesses who provide the lion’s share of employment in Ireland.”

Hungary this afternoon became the final European Union country to sign up to the deal.

- With reporting from AFP and Press Association