Ireland needs assurances that a global minimum corporate tax rate would not change and will be implemented by all countries signing up to it, Tánaiste Leo Varadkar has said.
The Minister for Enterprise and Trade made the remarks as he addressed an audience including representatives of US business and its public sector at the Centre for Strategic and International Studies (CSIS) in Washington DC.
His visit comes against a backdrop of uncertainty over the future of Ireland’s 12.5 per cent corporation tax rate.
Ireland is under pressure to sign up to an Organisation for Economic Co-operation and Development (OECD) deal that would see the introduction of a minimum global rate of at least 15 per cent.
The Government is likely to sign up to an increase in Ireland’s corporate tax rate but only if the OECD agrees to limit the text to 15 per cent and not “at least 15 per cent”.
Mr Varadkar is using the trip to tell business that Ireland remains a “fantastic” location for investment despite the uncertainty over the future of the corporate tax rate.
He attended at round table discussion at the US Chamber of Commerce this morning and will hold meetings with US Secretary of Commerce Gina Raimondo and ambassador Katherine Tai, United States trade representative, later on Monday.
Mr Varadkar was asked about what it would take for Ireland to sign up to the OECD deal at the CSIS event.
He said that Ireland’s position like those of other government is that setting tax rates is a “sovereign issue”.
“Ultimately we decide what our income tax rate is, what our corporate tax rate is, what our capital gains tax rate is and we’d be very loath to depart from that principle . . .
“That’s why we retain the option of not participating in any international agreement or European directive on it.
“That’s not our preference.
“We would rather be in the tent as you said both politically and economically.”
Mr Varadkar said it would “make more sense for us to be inside any global framework” as “it’s our instinct and that’s where we want to be.”
However, he said: “One thing that has worked very well for us in our system is to have this low corporation tax rate - but it’s not just the rate, it’s the reliability.
“So through boom and bust, through recession and through periods of growth, through changes in Government that rate has remained the same and low.”
He said this has allowed companies making a 30- or 40-year investment in Ireland to “know what the rules are”.
“And that’s why we’d want to keep it low and keep it constant,” he said.
“Among the things that we would be concerned about would be this idea that it would be at least 15 per cent because it might then go higher.”
Mr Varadkar said that Ireland would want to know that any agreed minimum global corporate tax rate “is the rate and it’ll stay at that rate and won’t change five years time or ten time”.
He said: “We’d certainly need to be assured that it would actually be implemented by all of the countries signing up to it.
“Obviously anything like that would have to go through US Congress, it would have to go through the European Parliament and national parliaments.
“So we need to know everyone was doing it.”
Later, speaking to reporters it was put to Mr Varadkar that the days of the 12.5 per cent rate are gone.
He said: “I can’t say that at this stage. As things stand we don’t have an international agreement on corporation tax.”
Mr Varadkar added that Ireland is willing to be part of one “if it’s in our interest”, but said: “We’re not going to allow a situation whereby there is an agreement and some countries implement it and some countries don’t so there’s a long way to travel yet on this I think.”
