Irish Finance Minister Paschal Donohoe reaffirmed, on Saturday 11 September, Ireland’s commitment to continue negotiations to finalise international corporate tax reform and asked for guarantees on the minimum level of taxation.
“I have told my counterparts that Ireland remains very much involved in the process, but we are not currently on board. This is a very important issue”, he told journalists in Slovenia after the informal meeting of EU Finance Ministers (see EUROPE 12788/1).
The reluctance of the Irish authorities focuses on Pillar II of the text on the table, which introduces a global minimum effective tax rate of at least 15%. “What is critical for Ireland is a certainty and predictability in the agreement”, Mr Donohoe said. However, according to Dublin, the phrase ‘at least 15%’ is a source of uncertainty, because it makes a higher level of taxation possible, even at a later stage.
Ireland is currently conducting a consultation with national economic actors on the interim agreement reached at the G20 ‘Finance’ level. They had until 10 September to express their views and the Irish government must now analyse these contributions. Ireland is also scrutinising the level of political acceptance of the future international agreement in the US.
Two other EU countries - Hungary and Estonia - are not part of the agreement. In Hungary, the corporate tax rate does not reach 10%. Budapest wants to exclude more of a company’s profits from the minimum tax base and for the rules to be the same for both the headquarters and the subsidiary of a group (see EUROPE 12770/11). Estonia, where profits are taxed only if they are distributed, is asking for a delay to include such profits in the scope of the agreement.
On Saturday, OECD Secretary-General Mathias Cormann presented the state of play of the ongoing negotiations to finance ministers. The aim is to present the final report of the G20/OECD Inclusive Framework on Base Erosion and Profit Shifting (BEPS) on 8 October for adoption at the end of October by the G20 ‘Finance’.
The day before, the French minister, Bruno Le Maire, had advocated for the following ambitious timetable: finalisation of the political agreement in 2021, development of the legal framework in 2022 and the global application from 2023. On Pillar II, the European Union will have to adopt a specific directive. It is not clear at this stage whether legislation will be needed in the EU to implement Pillar I on the reallocation of taxing rights.
Several European countries, including some that have signed up to the agreement, said they would find the 2023 date difficult to meet. (Original version in French by Mathieu Bion)