Ireland under pressure as France and Germany back US on global corporate tax
DUBLIN: Along with the United States, France and Germany, two member states of the European Union, have put a lot of pressure on Ireland, which benefits from lower corporate taxes. The two countries jointly came out in support of the US trump card, the global tax.
Earlier, Ireland had announced its opposition to the proposal. Ireland claims that each country should be given the opportunity to make competitive decisions regarding corporate taxes. But the United States and other EU countries have stuck to the idea of a global tax. Following this, France and Germany announced their support for the US proposal for a 21% global tax.
Ireland had been a corporate favorite with a low tax rate of 12.5%. In the context of Brexit and even before, large corporations had chosen Dublin as their EU headquarters. This caused considerable jealousy among the neighbor countries. Finally, they devised the weapon of global taxation in order to ‘suppress’ Ireland.
The United States and its allies are aiming to bring in a law requiring corporates to tax at least 21% of profits. If this is introduced, Ireland’s 12.5% gain will come to an end.
The Organisation for Economic Cooperation and Development (OECD) leads global tax negotiations with smaller countries in the European Union. The OECD is in talks with 139 countries on how to tax large multinational corporations. The talks, which were supposed to end in July, are expected to last until October.
Germany and France praised the global tax
The German Finance Minister Olaf Scholz and the French finance minister Bruno Le Maire praised the global tax at a joint news conference.
“I’m quite optimistic that we will have a good solution this summer, and this will change international taxation a lot,” German finance minister Olaf Scholz said.
“A race to the bottom on the taxation system will not be a solution for any European country,” Mr Le Maire said.
The French and German ministers have jointly presented spending and reform proposals to the European Commission in order to gain access to the EU’s €750 billion pandemic recovery fund. The EU commission set April 30 as the deadline for this.
Ireland has made its stance clear
Finance Minister Paschal Donohoe said it was not surprising that France and Germany supported a global minimum tax. “They are restating long-known and well-held positions in relation to corporate tax levels within the EU,” he said.
The minister said that “solidarity is in short supply” on tax matters. He said Ireland would have to compete in terms of taxes in the European Union and globally. “It will be up to us to make the case for tax competition, within certain parameters, being a legitimate policy response back to the disadvantages of size or location,” he added.
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