The Cabinet has approved an increase in Ireland's corporation tax from 12.5% to 15% for companies with a turnover in excess of €750m.

The reforms have been brokered by the OECD among 140 countries, as part of a widespread agenda to modernise global tax rules, to make them fairer and reduce the use of aggressive tax planning by some large multinational companies.

Speaking at a press conference, Minister for Finance Paschal Donohoe said the agreement involves "far reaching reforms to the global taxation framework".

He said he sought changes to the deal secure "certainty and stability".

"I believe we have now reached that point", he said. "This is the right decision. It is a sensible and pragmatic decision", and will be "critical to create" certainty.

The revised framework confirmed that the proposed minimum rate of 15% will only apply to companies with annual turnovers of over €750m a year.

It will affect 56 Irish multinational companies employing 100,000 people. It will also affect 1,500 foreign-owned multinationals employing 400,000 people here.

However, 160,000 businesses employing 1.8 million people will not be subject to the new rate. These businesses will continue to pay corporate tax at the current 12.5% rate.

The Government has received assurances on both this point and the retention of Research & Development tax credits 'at the highest level' in the European Commission.

The Department of Finance is still guiding that the impact on corporate tax receipts will be in the order of €800m to €2bn a year.

It is expected the new rules will take effect from 2023.

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On RTÉ's Prime Time programme, Tánaiste Leo Varadkar said the Government has certainty that the rise in corporation tax for large companies is a "once in a generation event and the rate won't be going up over time".

"Once we came to the conclusion that this was likely to happen, we took a decision that it's better for Ireland to be inside the tent," he said.

"We wanted concessions and protections before we got into the tent, and we negotiated very hard and we took our time to make this decision, and because other countries really wanted Ireland in, they were willing to make these concessions to us and removing that term 'at least' before the 15%."

He said the government has considered the loss of revenue and put a contingency in place providing for this change and he said it will not impact on budget plans, or future budget plans.

Paschal Donohoe has described the decision as a "significant milestone" in what has been an ongoing process.

He said that it is important to consider what would happen if Ireland decided to remain outside of the agreement.

"It is essential that Ireland continues to stay in line with key international accords, particularly one that is likely to have the support of the international community."

If Ireland is not in the agreement it would "lose influence in respect of critical decisions" which will take place in the coming months on the implementation rules, the minister told a press conference.

The failure to sign up would lead to continued uncertainty for businesses operating in Ireland, he said.

He added that the design of the global minimum tax means that a country can apply a "top-up" tax to a subsidiary of a multinational enterprise, which has been taxed below the minimum effective Ireland, which means if Ireland were not to apply the global minimum tax rate, it would mean that another jurisdiction could collect the tax.

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The European Union and the Commission have assured him that the directive it will propose "will be faithful to the agreement and not go beyond that consensus", he said.

Minister Donohoe said that "it is essential that as a small and open economy" that we can influence changing global taxation rules.

Mr Donohoe said that when "at least 15%" was mentioned, some parties wanted it to move upwards. The minimum rate will be 15%, "but we have secured removal of 'at least'," said Mr Donohoe.

Ireland has made its case and it has "been recognised", and we "moderated those ambitions and views".

Asked if other countries also wanted 'at least' removed from the agreement, Mr Donohoe - who is also president of the Eurogroup of eurozone finance ministers - said "the removal of 'at least' ... was Ireland and myself". He said he was making the case since July.

"The last thing on my mind is who will be a future president of the Eurogroup," he said. In terms of the consequences of Ireland being outside such an agreement, getting such positions was not a factor, he said.

We would have faced reputational and economic risks if we had remained outside the deal, he said.

"We will continue to be able to put our best foot forward," he added.

Minister Donohoe said in the US, a debate is under way in Congress on changes to their tax system, which will will align them to the OECD agreement.

Given the "significant investment by US multinationals here", this is significant, he said.

The Government's agreement will lead to "renewed momentum to that process".

"I am absolutely satisfied that our interests are better served within the agreement," he said.

Meanwhile, Estonia also said it would be signing up to the OECD tax deal today.

Prime Minister Kaja Kallas said that joining the reform would ensure "we have the best chance of ensuring that Estonia's business environment and tax policy continue to work in the interests of a better future for all of us".

Broad support for tax deal

Opposition parties have supported the decision to sign up to the OECD tax deal.

Sinn Féin said it accepted the merits of the process and Ireland could not be an outlier or labelled a tax haven.

Party leader Mary Lou McDonald said there must be an absolute assurance that the 12.5% rate will still apply to SMEs that are backbone of the Irish economy.

She also said the Government must be sure that Ireland can still retain a level of control to set and decide rates.

Labour said the move would not have a negative impact on existing jobs or the pipeline of investment.

Finance spokesperson Ged Nash said Ireland should have confidence to trade on its highly skilled workforce and mature sophisticated economy.

He also called on the Government to publish detailed financial projections of the cost of the move.

People Before Profit said the change was long overdue.

Deputy Richard Boyd Barrett said that it was right that "staggeringly profitable corporations that have been involved in very aggressive tax avoidance strategies should pay a little more in tax".

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Chief Executive of the IDA Martin Shanahan said the announcement will not come as a huge surprise to multinational companies operating here and it would not have an adverse impact on the existing base of foreign direct investment in Ireland.

On RTÉ's Six One, he said there has been an extraordinary strong flow of investment over recent weeks and months and the pipeline looks strong. He believes the country can continue to win investment as it has done within this global framework.

Ibec, the group that represents Irish business, said today's announcement is the "right decision, at the right time".

Reporting by Mícheál Lehane, Robert Shortt, Sandra Hurley