{"id":141113,"date":"2021-10-07T23:30:42","date_gmt":"2021-10-07T23:30:42","guid":{"rendered":"https:\/\/precoinnews.com\/?p=141113"},"modified":"2021-10-07T23:30:42","modified_gmt":"2021-10-07T23:30:42","slug":"ireland-agrees-to-global-tax-deal-sacrificing-prized-low-rate","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/ireland-agrees-to-global-tax-deal-sacrificing-prized-low-rate\/","title":{"rendered":"Ireland agrees to global tax deal, sacrificing prized low rate"},"content":{"rendered":"
DUBLIN (Reuters) -Ireland dropped its opposition to an overhaul of global corporate tax rules on Thursday, agreeing to give up its prized 12.5% tax for large multinationals in a major boost to efforts to impose a minimum rate worldwide.<\/p> Ireland, the low-tax European headquarters for blue chip companies including Apple, Google and Facebook, declined to sign up to the initial deal in July, objecting to a proposed rate of \u201cat least\u201d 15%.<\/p>\n An updated text this week dropped the \u201cat least\u201d, clearing the way for ministers to do what successive governments said they would never contemplate – giving up the low rate that has helped win Ireland investments and jobs for decades.<\/p>\n \u201cJoining this agreement is an important decision for the next stage of Ireland\u2019s industrial policy – a decision that will ensure that Ireland is part of the solution,\u201d Finance Minister Paschal Donohoe told a news conference.<\/p>\n \u201cThis is a difficult and complex decision but I believe it is the right one.\u201d<\/p>\n All bar a handful of the 140 countries involved signed up to the July deal, brokered by the Organisation for Economic Co-operation and Development (OECD), that marked the first rewriting of international tax rules in a generation.<\/p>\n The holdouts, which include fellow EU members Estonia and Hungary, cannot block the proposed changes. The 140 negotiating countries are due to meet on Friday to finalise the deal.<\/p>\n The U.S. Treasury, which had pressed Ireland to support the global minimum tax, hailed Dublin\u2019s decision as putting the world on a path toward a \u201cgenerational achievement\u201d to ensure corporations pay their fair share of taxes.<\/p>\n If Ireland had maintained its lower rate, multinationals that book profits there could be forced to pay the additional tax elsewhere under the proposals.<\/p>\n The government said it had received assurances from the European Commission that Ireland can maintain the 12.5% rate for firms with annual turnover below 750 million euros ($867 million) and keep tax incentives for research and development.<\/p>\n The Commission also promised it will stick faithfully to the OECD agreement and not seek a higher rate among member states, Donohoe said.<\/p>\n \u2018NO SUBSTANTIAL IMPACT\u2019<\/p>\n While Ireland wrestled with the prospective changes for months, it will not be the first change to its tax regime.<\/p>\n A 10% tax rate convinced Apple to set up a manufacturing facility in the 1980s, with Microsoft and Intel following suit.<\/p>\n The government increased this to 12.5% in 1997 to comply with EU state aid rules and multinational jobs mushroomed.<\/p>\n The 12.5% rate was fiercely defended in the intervening years, most notably when Ireland came under pressure to raise it as part of a 2010 international bailout.<\/p>\n Many analysts expect Ireland to remain competitive in the battle to attract foreign direct investment.<\/p>\n Some 1,500 multinationals that will be hit by the higher rate currently employ around 400,000 people or one in six workers in Ireland, Donohoe said.<\/p>\n \u201cWe would be reasonably confident that this won\u2019t have a substantial impact,\u201d said Kieran McQuinn, research professor at the Economic and Social Research Institute (ESRI) think tank.<\/p>\n \u201cAs a country matures, other factors such as the flexibility of our workforce (and) membership of the EU tend to become very important as well,\u201d he added.<\/p>\n ($1 = 0.8649 euros)<\/p>\n