Ireland needs assurances that a global minimum corporate tax rate will not be changed 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 – at the Centre for Strategic and International Studies (CSIS) in Washington, DC.
His visit comes against a backdrop of huge uncertainty over the future of Ireland’s 12.5 per cent corporation tax rate. Ireland is under pressure to sign up to an OECD deal that would see the introduction of a minimum global rate of at least 15 per cent, but when it was later put to Mr Varadkar that the days of the 12.5 per cent rate are gone, he did not accept that that was necessarily the case.
“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.”
The Government is likely to agree to an increase in Ireland’s corporate tax rate but only if the OECD will limit the text to “15 per cent” and not “at least 15 per cent”.
Two-day trip
Mr Varadkar, who is using the two-day trip to tell business that Ireland remains a “fantastic” location for investment, was asked at the CSIS event about what it would take for Ireland to sign up to the OECD deal.
He said that Ireland’s position, like those of other governments, is that setting tax rates is a “sovereign issue” 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.
“That’s not our preference,” he added. “We would rather be in the tent.”
Mr Varadkar said Ireland’s low corporate tax has “has worked very well for us” but he said “it’s not just the rate, it’s the reliability” and how it has stayed the same through boom and bust.
He said this has allowed companies making a 30- or 40-year investment in Ireland to “know what the rules are”.
“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,” he said.
Won’t change
Mr Varadkar said 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 in five or 10 years’ time.
“We’d certainly need to be assured that it would actually be implemented by all of the countries signing up to it,” he added.
Mr Varadkar pointed out that such a deal would have to go through the US Congress, the European Parliament and national parliaments.
“So we need to know everyone was doing it,” he said.
On Brexit, Mr Varadkar said the Withdrawal Agreement and the Northern Ireland protocol have “ensured we have avoided the worst of what Brexit could have wrought on us”.
He said he still hopes that the ongoing dispute over the protocol can be resolved in a “calm, sensible way” that doesn’t result in a “showdown”.
Mr Varadkar was expected to discuss trade with his counterparts in the Biden administration last night.
