A "momentous day" for tax policy in Ireland, is how Peter Vale, Tax Partner at Grant Thornton described the Government's decision to adopt a corporate tax rate of 15% for companies with a turnover in excess of €750m.
While the 12.5% rate has been a cornerstone of Ireland's tax offering for foreign investment, Mr Vale said uncertainty around the future tax landscape was damaging for Ireland and he believes the certainty that comes with the new proposals will be welcomed by many.
"The revised OECD agreement vindicates the approach taken by the Minister for Finance when not signing up to the original proposals, which provided for a new minimum tax rate of "at least" 15%.
"It would appear that discussions since the publication of the original proposals have led to a much clearer picture, with a fixed rate of 15%," he said.
Mr Vale said obtaining certainty on the longevity of that rate will be critical.
The 'right decision at the right time'
Ibec, the group that represents Irish business, has said today's announcement is the "right decision, at the right time".
While it acknowledged that the OECD accord may pose challenges in terms of competitiveness, it said Ireland's regime will remain attractive, given the country's existing track record.
"Today’s outcome with a firm commitment to a 15% minimum rate, and no more, is a vindication of the State’s position and will provide welcome certainty for small open economies," said Danny McCoy, CEO of Ibec.
Mr McCoy said they also welcome proposals for Ireland to maintain its 12.5% regime for those companies not in scope of the agreement.
Investors' confidence in Ireland remains strong, says IDA Ireland
IDA Ireland has said the changes resulting from Ireland's participation in the global tax deal are not likely to adversely impact Ireland's existing base of Foreign Direct Investment (FDI).
CEO Martin Shanahan said Ireland will remain competitive from a tax perspective.
"The recent changes to the draft OECD agreement secured by Ireland provide clarity on the global minimum rate that will apply for large companies, making it possible for Ireland to continue to provide stability for investors," he said.
Mr Shanahan said investors' confidence in Ireland remains strong.
"The pipeline of investment in the year-to-date has been extraordinarily strong with investment decisions being taken in the context of the discussions on the global agreement.
"Tax is important but it is but one part of Ireland’s proposition and it is imperative that we continue to remain competitive on all aspects of our investment offering, given the level of global competition for the investments we are trying to attract," he said.
'Good news' for businesses, says Irish Tax Institute
The Irish Tax Institute has welcomed the agreement on the OECD tax reform proposals announced by the Government this evening.
It said the decision brings much needed certainty and stability to the international tax system.
"This is good news for business and good news for governments as the world recovers from the pandemic," said Institute President, Karen Frawley.
She also welcomed the assurance from the EU that the new rate will apply only to companies with global revenues in excess of €750m.
"This means that our SMEs can continue to benefit from our 12.5% rate without any damage to their competitiveness," she said.
The Institute said the decision to consult stakeholders in Ireland was helpful to the process and it welcomes the commitment to continue that consultation during the implementation period.
Chambers Ireland welcomes 'certainty' announcement brings
Chambers Ireland has welcomed what it described as "the certainty" which today's OECD consensus on corporation tax provides for multi-nationals.
It said the organisation believes that Ireland’s interests will be best met by our legal, taxation, and regulatory framework remaining consistent with international law and best practice.
Chambers Ireland Chief Executive, Ian Talbot said the Government's strategy has created "certainty" for businesses at a critical time.
"The unknown upper band of the proposed rate was causing some global businesses to hesitate in committing to capital investment plans," he said.
He also welcomed the retention of the 12.5% for smaller firms.
"It will help our domestic economy prosper into the future," he said.