Ireland: Support for 12.5% global minimum tax rate

The Minister for Finance confirmed support for 12.5% global minimum tax rate

The Minister for Finance confirmed support for 12.5% global minimum tax rate

The Minister for Finance confirmed at a tax seminar on 21 April 2021 that Ireland is committed to the OECD BEPS process and advocates an agreement on the base erosion and profit shifting (BEPS) 2.0 project and also reaffirmed that any global agreement must facilitate healthy and fair tax competition and accommodate Ireland’s 12.5% corporate income tax rate.

  • The Minister noted that Ireland has already implemented several measures to address base erosion and profit shifting, some of which were agreed under BEPS 1.0 and some of which Ireland implemented unilaterally according to international best practices.
  • Measures include:
    • Amending the corporate tax residence rules to repeal the possibility for companies to be stateless
    • Ratifying the BEPS Multilateral Instrument
    • Adopting the 2017 OECD Transfer Pricing Guidelines
    • Implementing EU Anti-Tax Avoidance Directive measures, including anti-hybrid rules, controlled foreign company rules, and a new exit tax regime.

Later this year, Ireland is to adopt the “Authorised OECD Approach” for transfer pricing of branches, interest limitation rules and anti-reverse-hybrid rules to have fully adopted the internationally agreed BEPS 1.0 measures in advance of many other countries.

The Finance Minister stressed that small countries, including Ireland, need to be able to use tax policy as a legitimate lever to compensate for advantages of scale, location, resources, industrial heritage and the real, material and persistent advantages enjoyed by larger countries. Accordingly, the position was that the long-established Irish corporate tax rate of 12.5% was an appropriate and fair rate and within the ambit of healthy tax competition.

Read an April 2021 report prepared by the KPMG member firm in Ireland

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