'Lack of clarity' in OECD tax proposals, Donohoe says

The Minister for Finance, Paschal Donohoe, has launched a public consultation on proposals to reform international corporate tax rules.

Speaking at a press conference to mark the launch, the Minister said there are a range of issues in the agreement currently reached by the OECD that require more detail to be worked out.

He said Ireland remained committed to the process but could not accept certain aspects of the current agreement.

He said this was not just the proposed minimum 15% international corporate tax rate.

130 countries signed up to the OECD Agreement on 1 July.

Nine countries, including Ireland, remain part of the tax reform process but have not signed up to the Agreement.

The Minister specifically cited the use of the term 'at least' and said it was not clear what this could mean when applied to taxing rights, the tax base and the tax rate.

He said Ireland was engaged in 'sensitive discussions' and that other countries both inside and outside the current agreement "had strong views on the matter."

He said the Government remained completely committed to staying with the 12.5% corporate tax rate and said the next phase for the negotiations will be October.

On the public consultation, Minister Donohoe said he hoped there would be broad engagement from both companies and NGO's. The consultation period continues until 10 September.

Earlier, speaking on RTÉ's Today with Claire Byrne after the launch of a public consultation paper, Minister Donohoe said there is a "lack of clarity and certainty" in the OECD international tax proposals.

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He said Ireland's refusal to be in the OECD agreement as it stands is testament to his commitment to "protect our rate and protect our national interest."

Minister Donohoe said there remains "significant ambiguity" on the proposed global minimum tax rate of at least 15%.

"There are many different issues within the current draft agreement of moments that refer to "at least" and that is ambiguous," he said.

He also said there are fundamental issues regarding where taxes are paid, and how it is collected.

Referring to a meeting with the Treasury Secretary Janet Yellen, Minister Donohoe said he has made it clear that Ireland cannot be part if this agreement in its current form.

"She does want Ireland to take up the rate, and she's very clear about that, but I've also explained publicly and in the meetings that I've had with Secretary Yellen, that that is something that is phenomenally difficult for Ireland," he said.

Minister Donohoe said he has been commenting "for years" that global corporate tax policy was "about to change significantly", which he said he has taken into account in the most recent budgetary calculations.

"That moment is now happening. And that's the reason why in the budget calculations that I've done since the last budget we have assumed a decline in our corporate tax revenue. As I knew this change was coming. It's now happening, and the question is how Ireland will stand within it," he said.

He said Ireland's "reinvention" on tax has happened, but he said, "I expect that we will have to accelerate that reinvention across the coming decades."

He said the Government has been "baking" expected losses in tax revenue of approximately €2 billion a year into its economic forecasting since last year - and will continue to do so in this year's Summer Economic Statement.

He said that aside from any changes to the corporate tax rate envisaged in a draft international tax agreement which Ireland opposes, there are other elements in the agreement which indicate a loss of approximately €2 billion a year in tax revenue over time.

He said that future spending and expenditure decisions are already assuming "the loss of that money".

Minister Donohoe said that it is not appropriate to increase taxes when over 200,000 people are on the PUP payment and there is a need to get the country back to work first.

He said that stability and predictability of the tax code is essential to allow continued domestic and international investment in the Irish economy

He added that if circumstances change in the future, he will make the case for Ireland to change its corporate tax rate, but that for now he is "certain it is an important pillar that has allowed our economy to grow".