Gerald Nash (Louth, Labour)
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507. To ask the Minister for Finance his views on the recently enunciated position by the US with regard to global corporation tax reform; his plans to provide detailed forecasts on the proposed policy impact of the US corporation tax reform proposals presented to the OECD on Ireland; the estimated potential loss of corporation tax receipts per annum for each year to 2030, in tabular form if this proposal is implemented; the policy changes he is considering in order to sustainably replace the estimated loss to the Exchequer; and if he will make a statement on the matter. [19520/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I am aware of the broad reform programme ‘The American Jobs Plan’ published by the White House on 31 March, which includes proposals in respect to corporation tax reform and a commitment by the US to seek ‘a global agreement on a strong minimum tax through multilateral negotiations’. These proposals are already the subject of intense scrutiny and extensive debate in the United States, and at this stage it is far from certain what form the current proposals will take as the process moves towards completion.

Similarly, while the renewed engagement by the United States at the OECD is welcome, it is important to remember that there remain substantial issues to resolve before a consensus can be reached among the 139 member jurisdictions of the OECD Inclusive Framework, the decision-making body for how to address the challenges arising from digitalisation.

The implementation of the proposed changes to US corporate taxation should not operate so as to have a direct impact on Irish corporation tax receipts. However, if the proposed changes were to be enacted in full it is possible that they could result in behavioural changes by US multinationals, with indirect impacts on corporation tax receipts here. However, it would not be possible to estimate the impact on Ireland of such behavioural changes at this stage.

The US has also made a proposal at OECD to re-shape the OECD work known as Pillar One, which is focused on reallocating profits to market jurisdictions. That US proposal is to include almost all types of companies – not just highly-digitalised or consumer-facing companies – but also to introduce turnover and profitability thresholds at such levels that only the world’s largest and most profitable corporations would be impacted. This US Pillar One proposal is not yet sufficiently settled or fleshed out to estimate the potential impact on Ireland and corporation tax receipts here.

My Department previously estimated the annual cost to the Irish Exchequer of agreement of BEPS related measures pillars could be between €800m and €2bn, depending on the design of the final agreement, and in the absence of further certainty, this remains the working assumption for now. There is still a large degree of uncertainty as to the ultimate outcome of reform efforts, and this estimate will be revised when there is more clarity about the potential impact. If agreement is reached this year, it is likely that it will be several years before full implementation.

Ireland has seen the benefits of international cooperation, and we wish to achieve a sustainable, robust and growth-friendly agreement. However, I have concerns that the proposal for a minimum global tax rate could go beyond the need to address aggressive tax planning.

Small countries, such as Ireland, need to be able to use tax policy as a legitimate lever to compensate for advantages of scale, resources and location enjoyed by larger countries. At the same time, we accept that there needs to be boundaries to ensure any competition is fair and sustainable. The work at the OECD is a complex mix of various interconnected components and any final agreement on the overall work will need to form a complete package which is sustainable, fair, and grounded in principle if it is to be acceptable to all countries, small and large, developed and developing. If all countries can show flexibility and are prepared to compromise, we believe that a comprehensive and fair solution is feasible.