A Minimum Corporation Tax Rate of 15% is Good News for Ireland Inc!
8th October 2021
Ireland has signed up to an agreement between 136 countries for a two-pillar approach to international tax reform (“the OECD Agreement”) which includes a global minimum effective corporation tax rate of 15%.
While this is an increase from the Irish government’s long-term commitment to a 12.5% corporation tax rate, it is a good news story for Ireland Inc for the following reasons:
- Ireland is party and central to the global initiative on tax reform
- The minimum rate of 15% provides “certainty and predictability for multinational companies that have made Ireland their home” and long-term assurance of a fixed rate to companies with greater that €750 million turnover
- A corporation tax rate of 15% compares very favourably in the developed world
- Ireland has one of the most transparent taxation regimes in the OECD as the effective tax rate is close to the headline rate
- While the change in the rate has been well sign posted for some time, the level of FDI (Foreign Direct Investment) pipeline into Ireland is close to pre pandemic levels which were at record highs
- Ireland attracts FDI and International Headquartered location as a committed member of the European Union which provides companies with guaranteed access to the European market
- Ireland is the only English speaking country in the Eurozone and provides an ideal hub for organisations seeking a European base.
The success of the OECD Agreement is still dependent on tax reform being passed in the US which is consistent with the standards in the OECD Agreement.