Ireland on collision course with Brussels as Dublin refuses to bow to EU tax reform demand

Ireland: Donohoe discusses decision not to hike corporation tax

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Ireland has broken ranks with the EU over attempts by the bloc to impose an international agreement on corporation tax. The Irish corporation tax rate is the lowest in Europe at 12.5 percent, allowing Dublin to attract companies such as Google and Amazon to the country. Moves, backed by Brussels, to hike up the minimum rate to at least 15 percent has been firmly rejected by Irish Minister for Finance, Paschal Donohoe.

Mr Donohoe told RTE: “We are not in that agreement.

“I have indicated…and just to explain to listeners who might not be aware of the full details of this.

“There is a process underway through a global organisation to try to reach an agreement on a new set of global tax rules.

“They had a really important meeting just under two weeks ago.

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“A majority of countries signed up to an agreement to put in place a minimum effective tax rate for the world and Ireland is not in that agreement.

“We are committed to the negotiation to see if we can enter the agreement at some point.

“But I am making a case for our 12.5 percent.

“It has been a key feature of our economic policy now for decades.”

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He added: “The agreement as currently drafted refers to at least 15%, so the question is in the key features of the agreement.

“For example, in relation to the base, which is how much you can actually tax in your own jurisdiction, it does not have the certainty of precision that is needed for this country to make an evaluation of what to do.”

It comes as the EU bloc announced a U-turn over plans for a controversial tax on digital giants such as Google and Amazon.

On Monday, EU Commission spokesman Daniel Ferrie said: “In Venice, the G20 endorsed a historic agreement to create a more stable, fairer international tax system.

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“Which addresses the tax challenges that arrive from the digitalisation of the economy.

“This was an extraordinary result after years and years of negotiations.

“And one for which the Commission has worked tirelessly.

“For this reason, we have decided to put on hold our work on a proposal for a digital levy as a new EU own resource during this period.”

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