Donohue says Ireland could lose €2 billion a year under the proposed reforms

Irish Finance Minister Paschal Donohue has warned that Ireland could lose up to a fifth of its corporate tax revenue under a proposal approved by G7 finance ministers on Saturday.

But he said such a revenue loss, of about 2 billion euros a year, was already built into the government’s economic assumptions.

Finance ministers from the Group of Seven major industrialized nations meeting in London said they would support a minimum global corporate tax rate of at least 15 per cent, and put in place measures to ensure taxes are paid in countries where companies do business.

Donohue, who was at the meeting in his capacity as Eurogroup chair of eurozone finance ministers, said his officials had already modeled the impact of the proposals for Ireland.

«This suggests that Ireland could lose up to a fifth of our total corporate tax revenue and that the potential loss of revenue is already used up in budgetary accounts over the medium term,» he told The Irish Times.

The proposals must be approved by the Organization for Economic Co-operation and Development (OECD) in the coming months before they can take effect. Donohue said he would continue to defend Ireland’s 12.5 percent corporate tax rate in negotiations with European Union member states and the United States, who met Treasury Secretary Janet Yellen on Saturday.

In my bilateral engagement with the Organization for Economic Cooperation and Development and with the Secretary of State [Janet] Yellen continued to advocate the case for legitimate tax competition within certain limits and the role of small and medium-sized economies in the deal that is yet to come. I will continue to raise this issue.»

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multinational companies

Donohue expressed confidence that the multinationals would remain in Ireland despite any change in the tax rate. He noted that there was new foreign direct investment (FDI) in Ireland this year already despite the coronavirus pandemic.

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