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Minister for Finance Paschal Donohoe is to hold a bilateral meeting with US treasury secretary Janet Yellen on the margins of this weekend’s meeting of G7 finance ministers in London, in which global corporate tax reform is sure to figure. The US is leading calls for an agreement at the Organisation for Economic Co-operation and Development (OECD) for a major overhaul of corporate tax rules, a process which threatens Irish tax revenue and also the use of a low tax regime to attract multinationals.
The G7 ministers look set to support the call for a global tax reform package at this weekend’s meeting, which takes place on Friday and Saturday in London. However, it is not yet clear if their statement will mention a proposed figure, or minimum, for a global tax rate – a key part of the talks of vital interest to Ireland.
Biden propsal
The US has recently signalled that it would agree to a 15 per cent global minimum rate . While this is supported by the EU members of the G7 – France, Italy and Germany – and by the US, it is not clear if the UK and Japan will agree to inclulde a figure at this stage
As well as the OECD talks, the Biden administration is putting forward its own domestic reform programme, including a proposed 21 per cent minimum rate for the international earnings of its multinationals.
As things stand, this would involve US mutinationals with Irish bases paying a top up payment in the US, having paid the 12.5 per cent rate here. However, the Biden plan is being negotiated with US Congress and could change, with the US support for a minimum global rate of 15 per cent a possible signal.
Mr Donohoe, who is attending the meeting in his role as president of the Eurogroup of finance ministers, will also hold talks with the new head of the OECD, Mathias Cormann, another central player in the global tax talks.
British chancellor Rishi Sunak, who is hosting the meeting, underlined the UK’s focus on the part of the global tax reform agenda relating to big multinationals paying tax in markets where they sell. The US has put forward a revised plan here, under which the 100 largest companies would be hit by this charge. This would reduce the amount of tax which some big players pay in Ireland.
However, the main focus on Minister Donohoe is likely to be on the arguments for a global minimum tax rate and the separate but linked US reform plans.