Ireland’s 12.5 per cent corporate tax rate for big companies could be in place for longer than expected as EU finance ministers struggle to reach agreement on when to implement a new 15 per cent minimum rate.
Minister for Finance Paschal Donohoe had said that if agreement was reached to implement the new Organisation for Economic Co-operation and Development (OECD) plan, then he would legislate in the next finance Bill to have it in place by the start of next year. However this timetable is now in doubt.
Poland, Sweden, Estonia and Malta have blocked a French-proposed compromise on how to implement minimum corporate tax across the EU, showing that the way towards implementing the OECD plan is not straightforward. Doubts over what will be agreed by the US Congress are central to this.
As tax issues require unanimous backing in the 27-nation EU, French finance minister Bruno Le Maire said he would put the issue back on the table the next time ministers meet in April.
“Tax justice takes a long time but in the end it’s important that tax justice wins,” Mr Le Maire told a meeting with top tax officials from EU countries.
After years of negotiations nearly 140 countries reached a two-track deal last October on a minimum tax rate of 15 per cent on multinationals and agreed to make it harder for companies like Google, Amazon and Facebook to avoid tax by booking profits in low-tax jurisdictions.
France, which currently holds the EU's rotating presidency, has been pushing for quick EU implementation of the overhaul of cross-border tax rules.
However, in the face of concerns from some EU countries that they would not be ready, France proposed a compromise that pushed back implementation of the new rules until the end of next year, rather than the beginning. This would delay the introduction of the new minimum rate for big companies in Ireland.
It also proposed a firm political commitment to not let the two pillars of the overhaul be separated, but Poland said that did not go far enough and it needed stronger legal assurances.
Swedish, Estonian and Maltese officials also said that they could not sign on to the deal as it currently stands, although Ireland and Hungary, which have had strong misgivings in the past, said they were satisfied.
The global tax reform is supposed to be brought into force next year, although that has long been seen as highly ambitious in large part because the US administration has struggled to push it through Congress. (Reuters – additional reporting by Cliff Taylor)
