The G7 deal has been struck with the aim of cracking down on major companies paying low levels of tax.
Ireland could lose around €2.2 billion annually after today’s “historic” G7 agreement on corporate tax reform, according to Finance Minister Paschal Donohoe.
After years of discussion, finance ministers from wealthy G7 nations have agreed to a global base rate of corporation tax on large firms of at least 15%.
This is with the goal of cracking down on major companies paying low levels of tax.
Speaking about the agreement, UK Chancellor of the Exchequer Rishi Sunak said: “I’m delighted to announce that G7 finance ministers today after years of discussions have reached a historic agreement to reform the global system to make it fit for the global digital age and crucially to make sure that it’s fair so that the right companies pay the right tax in the right places.
“This is a very proud moment and I want to thank my G7 finance minister colleagues for their collective leadership and for their willingness to work together to seize this moment to strike a deal of historic significance that finally brings our global tax system into the 21st century.”
? At the @G7 in London today, my finance counterparts and I have come to a historic agreement on global tax reform requiring the largest multinational tech giants to pay their fair share of tax in the UK.
?The thread below explains exactly what this means. #G7UK pic.twitter.com/HdcK1HuM91
— Rishi Sunak (@RishiSunak) June 5, 2021
Donohoe attended the G7 meeting in London as President of the Eurogroup and told RTÉ that Ireland “could lose up to a fifth” of its overall corporate tax revenue if the agreement is implemented, which would be around €2.2 billion.
Ireland’s current corporate tax rate is 12.5%.
However, the Minister also said that the country’s “potential loss of revenue” was already built into the government’s “medium-term budgetary calculations”.
The Minister also said on Twitter: “I note the joint position by G7 finance ministers on international corporate taxation. It is in everyone’s interest to achieve a sustainable, ambitious and equitable agreement on the international tax architecture.”
I note the joint position by #G7 finance ministers on international corporate taxation. It is in everyone’s interest to achieve a sustainable, ambitious and equitable agreement on the international tax architecture. (1/2)
— Paschal Donohoe (@Paschald) June 5, 2021
The G7 proposal must be now approved by the Organisation for Economic Co-operation and Development (OECD) before being implemented.
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