Major US companies have told Finance Minister Paschal Donohoe that Ireland would be unwise to stay out of a global tax deal if a deal is ultimately reached on taxing corporate profits around the world.
US Chamber of Commerce intervention in Ireland comes as Minister faces international pressure to accept OECD proposals for a global corporate tax rate of “at least” 15% .
The plan is highly problematic for Mr Donohoe due to his years’ insistence on defending Ireland’s 12.5 per cent rate which has long been a source of friction with Europe.
He will meet today with the economic chief of the European Commission, Paolo Gentiloni, who will explain that Ireland will still be able to compete on a tax level even after the transposition of such an agreement into EU law.
“We will not end tax competition. We will keep huge differences between European Member States and on the world stage. But the idea is to have a stable, predictable and fair global framework, ”he told the Irish Times before his visit to Dublin.
“This competitiveness… is not only linked to this minimum tax difference, which will remain anyway. It is also linked to the achievements that the country has achieved in terms of skills, education, university, business environment.
He added: “It’s not based on two percentage points of this or that rate.”
Submission to Donohoe
The chamber, which represents all of the state’s major US groups, said if a “comprehensive international tax deal is reached” it does not believe “staying out” would be “in Ireland’s best interest” .
His views were set out in a submission in recent days to Mr Donohoe, seen by The Irish Times, as part of a public consultation on tax policy.
After months of informal behind-the-scenes discussions between government and business leaders, the document comes as companies face the potential loss of the 12.5 percent rate after world powers backed the plan ‘OECD.
The views of the US chamber are important as it claims 700 to 800 members, with a board comprising directors from tech giants Facebook, Google and Intel, financial services groups JP Morgan and Northern Trust, and pharmaceutical groups Pfizer and Johnson. & Johnson. Some 180,000 Irish jobs are directly attributed to US investment and 140,000 indirect jobs.
Ireland is one of the few countries to oppose the OECD proposals, as Mr Donohoe waits for the US Congress to accept the plan before deciding whether to move.
Alignment with the United States
A key Irish priority at this point is to continue alignment with the US if the OECD initiative goes ahead.
With little certainty about the plan’s fate in Washington, however, Donohoe wants to avoid the risk of accepting the OECD’s proposals only to see them collapse in the US Congress. This would leave him exposed to pressure from Brussels to dismantle the 12.5% regime without US alignment.
Mr Donohoe is also campaigning to withdraw the proposed rate of “at least” 15%, fearing this will prompt the European Commission to push for a higher rate – at an uncertain level – to be applied. across the EU.
The US House supported Mr. Donohoe’s position, saying it was “sensitive” given the lack of details on issues such as what a minimum rate would be. “An ideal outcome for global trade and business is a global agreement that gives certainty to companies and countries,” he said.