Donohue warns that corporate taxes could be cut by a fifth of the Organization for Economic Co-operation and Development moves

According to Finance Minister Pascal Donohue, global changes could reduce the corporate tax of 11.8 billion euros that the republic receives by a fifth.

Donohue told the American Chamber of Ireland, whose members represent major US investors, that the republic will play its part in OECD moves to tackle cross-border tax evasion.

He said he was confident that an agreement could be reached this year and that it would cost about a fifth of corporate taxes in the state, which amounted to 11.8 billion euros last year.

The United States on Thursday proposed a minimum global corporate tax rate of at least 15%, which is higher than the state rate of 12.5%. Several European governments welcomed the proposal.

Mr Donohue emphasized that he had reservations about any steps toward comprehensive tax coordination rather than addressing strict tax planning.

He said any changes approved by the OECD must take into account the stability and certainty that companies need to invest in the future.

Likewise, he said tax regulations should continue to support investment in research and development.

“I think that small countries need to be able to use tax planning as a legitimate tool to compensate for what they do not have,” he told the World Congress of the House of Representatives.

Mr. Donoh added that this includes the resources and industrial heritage enjoyed by many major countries.

The minister said that the government is still committed to the 12.5 percent tax of the republic on corporate profits.

He pointed out that employees of multinational companies in the republic used to pay an income tax similar to that of their companies’ profits.

However, the minister stressed that the matter was not one-sided. “Ireland is the ninth largest source of inward investment in the United States and 110,000 people work for Irish companies in more than 1,000 locations in all 50 states,” he said.

US investors in the republic include Pfizer, which will start manufacturing Covid-19 vaccines here later this year, computer chip giant Intel, and software group Microsoft.

More than 180,000 people work in 800 American companies in the republic, while about 140,000 people depend indirectly on these companies for employment.

European welcome

Meanwhile, the US proposal to set a global minimum corporate tax rate of 15% on Friday was warmly welcomed in other parts of Europe.

“This is really a great progress,” said German Finance Minister Olaf Schultz upon his arrival to meet his European counterparts in Lisbon, minutes after his French counterpart gave a positive response. “We will have a real chance that this summer will happen and what we have been working on for a long time.”

The final step in the race toward a deal between 139 countries was lower than the 21% the US had previously suggested for overseas earnings for its companies, a level some countries have found exaggerated.

OECD negotiations have stalled for years in ever-increasing levels of technical complexity, transatlantic conflicts and trade tensions. The upcoming deal raises the possibility of much larger bills to be paid to global companies.

“The main issue is not the number, even if we manage to live at 15 per cent – it could be a good compromise between the expectations of all OECD members,” said French Finance Minister Bruno Le Maire upon arrival at the meeting in Lisbon. .

“The primary issue is to define a global framework for digital taxes and minimum taxes.”

It is a step towards reaching an agreement, and so has Italian Economy Minister Daniele Franco, EU Commissioner for the Economy Paolo Gentiloni said. Mr. Donohue did not take up the issue publicly in Lisbon.

Two Eurozone officials said at the meeting that the US bid would find broad support in the wider European Union. “The 15 percent rate will be acceptable to all EU member states, including Luxembourg and Ireland,” an official said.

Speaking to reporters in Tokyo, Japanese Finance Minister Taro Aso said the US proposal represented progress, although more talks are needed. He said he expects a move toward global deals, including digital tax, at the G20 summer meeting, but that the final deals may not take place until the end of the year.

American room

Separately, a US House of Representatives poll released on Friday showed that four in five Irish people believe that US companies are important to the future of the republic, while 94% said these companies will be vital to the economic recovery.

About three-quarters of respondents said that low taxes helped attract multinationals here, but 63% believe the quality of Irish workers is the main reason US companies invest here.

However, 63% of survey respondents underestimated the number of people who work for US companies, saying it is less than 100,000 and not the actual number of 180,000.

US House of Representatives Speaker Gareth Lambie, president and vice president of Ireland’s social media giant Facebook, said the poll showed the public supports the contribution of US companies to the country. Additional report: Bloomberg