10/08/2021 | Press release | Distributed by Public on 10/08/2021 11:17
The Minister for Finance, Paschal Donohoe, TD, has today (Friday) welcomed the agreement reached by the OECD Inclusive Framework to reform the international tax rules to address the challenges arising from the digitalisation of the global economy. A revised statement and detailed implementation plan have been agreed by 136 jurisdictions including all the EU Member States and OECD members, and will provide a pathway forward for the important technical work which will continue.
Speaking after today's meeting Minister Donohoe welcomed the agreement noting the benefits that will accrue from this agreement,
'The agreement reached this evening at the Inclusive Framework demonstrates the importance of working together to achieve positive outcomes for the world. This landmark agreement will address global tax challenges of digitalisation and provide the certainty and stability that large business and Government need.'
The far-reaching agreement will introduce two distinct pillars to be implemented by the members of the Inclusive Framework. Pillar One will see a reallocation of a proportion of profits to the jurisdiction of the consumer. Pillar Two will see the adoption of a new global minimum effective tax rate applying to multinationals with global revenues in excess of €750m.
The revised statement builds on the July statement and provides the certainty necessary for Ireland to join the agreement. Minister Donohoe received Government approval to sign up to the agreement yesterday.
'In July, while I indicated I was broadly supportive of the agreement, I sought additional clarity in relation to key aspects of the agreement, notably 'at least 15%'. Today's agreement provides that clarity including a set minimum effective tax rate of 15% will apply to our multinational enterprises.
Ireland's long-standing corporation tax rate of 12.5% will continue to apply to the vast majority of our businesses who provide the lion's share of employment in Ireland.'
One of the key elements of the agreement will also see the removal of unilateral digital service taxes over the coming years, which will result in level playing field across the globe and prevent digital taxes resulting in trade tensions. The technical work will now continue on developing the legislation necessary to deliver this agreement in into statute books across the globe.
Minister Donohoe indicated that following the agreement Ireland will continue to be an attractive location for multinational enterprises to prosper.
'I am confident that Ireland will provide an attractive home for multinational enterprises long into the future. Ireland will remain 'best in class' when multi-nationals look to investment locations, we will continue to have an attractive tax rate, and we will continue have all of the many benefits multinational enterprises in Ireland benefit from and enjoy.'
The two pillars are to be further developed through technical working parties over the coming months with an implementation date of 2023 set for both pillars.
Note to Editors:
Link to OECD Statement - Final Statement and Implementation Plan