Dáil Éireann Debate, Thursday - 4 July 2024
251. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which corporation tax changes are likely to impact on this country’s future; and if he will make a statement on the matter. [29080/24]
Amharc ar fhreagraAs the Deputy is aware, Ireland joined with almost 140 other countries in reaching agreement in October 2021 on how to address the tax challenges arising from digitalisation of the economy.
The agreement contains two pillars.
Pillar One will see the allocation of taxing rights away from countries such as Ireland to countries where consumers and markets are based. It will be implemented via a Multilateral Convention, on which work is well advanced at the OECD. It is expected that this important international agreement will be brought before the Oireachtas in due course in advance of its ratification.
Ireland agreed to Pillar One even on the basis that the current rules, which were first agreed a century ago, must change to reflect how modern businesses can have a presence and make profits in foreign markets without necessarily having a physical presence there.
Pillar Two came into force on 31 December 2023 in many jurisdictions including Ireland, introducing a 15 per cent effective minimum tax rate for MNEs with a turnover of above €750 million per annum.
These rules have been years in the making and we believe that they have the potential to bring much needed stability to the international tax landscape. While the agreement will come at a cost to Ireland it is clear that a more settled international tax environment will benefit taxpayers and administrations alike, allowing countries to focus on safeguarding competitiveness and providing a sound and stable platform for future investment.
The international tax system needs to keep pace with changes in how business is conducted internationally, and the agreement achieved at the OECD is a fine balance that provides the certainty and stability required for economic growth while at the same time protecting the interests of small countries such as ours.
