A change to Ireland’s 12.5 per cent corporation tax “won’t impact the average Irish business”, the Tánaiste has said.
The Government remains in talks with the Organisation for Economic Co-operation and Development (OECD) about proposed reform of global tax rules, already signed up to by 130 countries.
With discussions ongoing, the Taoiseach this week refused to commit to Ireland’s highly-prized 12.5 per cent tax rate, a position backed by Leo Varadkar on Tuesday.
Mr Varadkar said that if Ireland does sign up to the agreement, it will only impact on very large companies, earning over $750 million (€640 million) per year.
He told reporters: “Any agreement that we may or may not come to, won’t impact the average Irish business.
“It won’t impact even large businesses or mid caps, the 12.5 per cent rate will stay in place for them.
“Any change — if there is any change, we’re not committing either way — would only apply to those very large companies.”
Ireland is one of just nine countries yet to sign up to the OECD framework to reform the global corporate tax regime, in a deal back by the EU and 130 countries worldwide.
International pressure is mounting on the country to sign up to the deal, with the Government’s opposition to the proposals appearing to soften in recent months.
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Mr Varadkar said: “Ireland is not a tax haven, nor do we wish to be seen as a tax haven.
“So we’d certainly prefer to be part of any international agreement.
“From my discussions yesterday, and in Paris a few weeks ago, other countries want us in.
“But that gives us a little bit of leverage and a little bit of negotiating power. We want to make sure that we protect Ireland’s economic interests.
“Bear in mind, many countries will benefit from an agreement on international tax. Ireland as as a country will lose revenues, so we have to protect our interests. That’s what we’re trying to do.”
Mr Varadkar denied that the country is facing a choice between damaging its international reputation by rejecting the deal, or damaging the economy by signing up to it.
He said: “I wouldn’t see it in that frame. I think what has worked for us is having a low rate of corporation profit tax and having certainty about that.
“That it doesn’t change because governments change, it doesn’t change because there’s a boom or bust or recession.
“We’ll be able to say to companies thinking of investing billions of euros in Ireland, hiring thousands of people, to be able to say to them, that we have this low ratio that’s going to be there and doesn’t change is a big part of our offering.
“But it’s not the only thing. We offer other things as well, particularly our talent, track record and so on.
“But it is a big part of our pitch when it comes to foreign investment, and has been very successful. That’s what we want to retain it.
“But on balance, we’ll have to make a decision at a certain point as to whether it’s better for us to be within an international agreement, or to be without it.
“And that’s why we can’t make a firm commitment at the moment as to whether or not we’ll be inside or outside that agreement.”
