US treasury secretary Janet Yellen has praised Ireland for taking the “hard and brave decision” to join the new global corporate tax regime.
Last month Ireland agreed to join the OECD framework for a global rate of 15 per cent tax, giving up its highly prized previous rate of 12.5 per cent.
Speaking at Dublin Castle on Monday, Ms Yellen said both Ireland and the US could be winners under the new regime.
She said: “For my part, I am beyond grateful to the Irish people for saying yes.
“Let us make the most of this moment.
“And to conclude, I want to personally thank and applaud the leadership of your finance minister and Government, for making the hard and brave decision, to join the Unites State and 134 other countries in supporting this unprecedented international framework agreement.”
Ms Yellen argued the agreement would ultimately benefit working and middle class people over big business.
“The race to the bottom has deprived our nations of the funding they need to invest in themselves” she said, at an event organised by the Institute of International and European Affairs (IIEA).
“In Ireland, as elsewhere, companies often paid much less than even a low corporate headline tax rate would suggests.
“Tax competition among nations had created a beggar thy neighbour approach to government policy, where working and middle class people around the world lost, and no country could win in the long term.”
But she insisted Ireland will still be able to compete under the new tax regime.
“Instead of asking who can offer the lowest tax rate, it will allow us to ask which nation could offer the best physical and technological infrastructure, and most importantly, the most talented workers” she said.
She added: “Unlike the race to the bottom, this new race can have more than one winner.
“Both Ireland and the US are well positioned to win that race.
“Ireland’s competitive edge has long been far more than just a low corporate tax rate.
“Ireland is Exhibit A of a country investing in human capital and creating the necessary business ecosystem for sustained growth.”
Ms Yellen added that the US views Ireland as an ally, and “values Ireland’s role as a bridge between the US and the EU”.
Finance Minister Paschal Donohoe praised Ms Yellen’s role in the reaching of a global deal on tax reform.
“The leadership shown by Secretary Yellen since taking office was instrumental in brokering a fair and balanced agreement for all,” Mr Donohoe said.
He said it would create conditions for “long-term certainty for businesses and investors” in Ireland.
Mr Donohoe thanked Ms Yellen for her “understanding” of Ireland and the country’s perspective on tax reform.
“Our values, our heritage, our future, means that Ireland should be influencing, shaping and inside international agreements,” he said.
Ms Yellen has said the recent global tax deal “wasn’t destined to happen”.
“Our two nations shared a rich and storied past, and have an important friendship today,” she said.
Concluding her initial remarks, @SecYellen says "President Biden is not the only one who can quote Irish poets. On global tax reform, she thanks @Paschald and quotes Beckett 'let us make the most of it'." pic.twitter.com/EFzXIH4ZO6
— IIEA (@iiea) November 1, 2021
On tax, she said Mr Donohoe helped her understand how “totemic” Ireland’s corporate tax rate of 12.5% had been for several decades.
“As the world changed, the international tax rules largely did not, leading countries and companies to interact in unexpected ways.”
The changes to tax rules, she said, will help people in Ireland and beyond.
“This global system, with its multilateral enforcement tools, will help ensure that multinational corporations pay their fair share in Ireland.”
