Ireland Wants OECD Deal to Accommodate 12.5% Corporate Tax Rate

Any international agreement on how companies are taxed must allow for Ireland’s long-standing corporate tax rate, the Irish government said.

Ireland will “work towards” a deal at the Organization for Economic Co-operation and Development that “accommodates” the country’s “long standing 12.5% corporation tax rate, which is fair and within the ambit of healthy tax competition,” the government said in an economic stimulus plan published Tuesday. “An agreement at the OECD will bring stability to the international tax framework,” it added.

Ireland has staunchly defended how it taxes some of the world’s biggest companies, even in the face of criticism from larger European partners. Tax competition is a legitimate tool for small countries, which may not have the same advantages as big ones, Irish Finance Minister Paschal Donohoe argued in April.

Ireland’s renewed defense of its corporation tax rate comes ahead of a Group of Seven meeting this weekend which could see agreement on a global minimum tax rate. Expectations of a preliminary deal between the world’s richest economies have risen after the U.S. made proposals on both a minimum rate and rules to reallocate tax revenues of the biggest multinational firms.

OECD talks on tax reform “must be considered in the context of the broader challenges we will be facing as we emerge from the pandemic,” the Irish government said.

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