Big US companies have told Finance Minister Pascal Donohue that Ireland would not be wise to stay out of a global tax deal if the agreement on taxing business profits worldwide is finally settled.
The intervention by the American Chamber of Commerce in Ireland comes as the minister faces international pressure to accept OECD proposals for a global corporate tax rate of “at least” 15 percent.
The plan is highly problematic for Mr Donohue as he has insisted for years to defend the 12.5 per cent Irish rate that has long been a source of contention with Europe.
Today he will meet the European Commission’s economic chief, Paolo Gentiloni, who will say that Ireland will remain competitive on tax even after such a deal is converted into EU law.
We will not put an end to tax competition. We will keep the great differences between the member states of Europe, and on the world stage. But the idea is to have a stable, predictable and fair global framework,” he told The Irish Times before visiting Dublin.
“This competitiveness … is not only related to this difference in minimum taxes, it will remain anyway. It is also related to the achievements of the state in terms of skills, education, university and business environment.”
“It does not depend on two percentage points of this rate or that,” he added.
Submit to Donohoe
The chamber, which represents all of the major US groups in the state, said that if a “detailed international tax agreement was reached” it did not believe “staying out” would be “in Ireland’s best interest”.
Her views were presented in a submission in recent days to Mr Donohoe, seen by the Irish Times, as part of a public consultation on tax policy.
After months of informal discussions behind the scenes between government and corporate leaders, the paper comes as businessmen face a potential 12.5 percent loss after world powers backed the OECD plan.
The opinions of the American Chamber are important because it has 700-800 members, with a board that includes directors from tech giants Facebook, Google, Intel, financial services groups JP Morgan and Northern Trust, and drug groups Pfizer and Johnson & Johnson. About 180,000 Irish jobs are directly attributable to US investment and 140,000 indirect jobs.
Ireland is one of the few countries sticking with the OECD proposals, with Mr Donohue waiting for clarification on whether the US Congress will accept the plan before deciding whether to act.
Compatibility with the United States
A major Irish priority at this point is to pursue alignment with the United States if the OECD initiative continues.
However, with little certainty about the plan’s fate in Washington, Donohue wants to avoid the risk of accepting OECD proposals only to see them crumble in the US Congress. That would leave him vulnerable to pressure from Brussels to dismantle the 12.5 per cent regime without siding with the US.
Mr Donohoe is also campaigning to remove the proposal for a “at least” 15 per cent rate, fearing it could prompt the European Commission to push for a higher rate – at an uncertain level – to be applied across the EU.
The US Chamber backed Mr Donohoe’s position, saying it was “reasonable” given the lack of details on issues such as the minimum rate. “The ideal outcome for global trade and business is a global agreement that gives certainty to companies and nations,” she said.
“Spécialiste de la télévision sans vergogne. Pionnier des zombies inconditionnels. Résolveur de problèmes d’une humilité exaspérante.”