Michael Lowry (Tipperary, Independent)
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332. To ask the Minister for Finance if he has considered the impact of the potential loss of corporation tax receipts on the Exchequer arising from the efforts by the European Union to strike a deal among the member states on a minimum tax rate; his plans to negate the impact of this; and if he will make a statement on the matter. [38057/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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On 8 October 2021, members of the OECD/G20 Inclusive Framework on BEPS agreed to the statement on the ‘Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy’. Pillar 2 introduces a global minimum corporate tax rate of 15 per cent.

My Department and the Revenue Commissioners previously estimated that the cost of this agreement could be up to €2 billion annually when both pillars come into effect. However, this is an extremely challenging exercise, both in terms of timing and magnitude. Although there are two pillars to this agreement, it is important to understand that they are intended as integral parts of a single agreed solution. How they interact and the degree to which that interaction influences business behaviour is very difficult to predict.

It should also be stressed that what we have at the moment is a broad high level agreement on the main features of a solution. The agreement is planned to come into effect from 2024, but this requires a huge amount of technical work on how it will be implemented. These discussions have been ongoing since the agreement was concluded and will continue throughout this year. As technical discussions continue, officials from my Department and from Revenue will keep the position under review.

As I have highlighted on many occasions, the level of concentration in the corporate tax base represents a very real risk to the public finances. Our medium-term strategy over the next two budgets will be to invest in our public services, phase out temporary COVID-related spending and repair the public finances. In doing so, we will restore a fiscal buffer to be able to withstand the next crisis.

Michael Lowry (Tipperary, Independent)
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333. To ask the Minister for Finance if he will revise Ireland’s position on the European Union minimum corporation tax rate in light of challenges experienced by the French presidency to agree a consensus position among member states; and if he will make a statement on the matter. [38058/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland made the commitment to the OECD agreement, which includes the global minimum tax rate, last October, as I believe that this agreement represents a fair compromise reflecting the competing interests of the many countries involved in the negotiations, large and small, developed and developing. It will ultimately bring long-term stability and certainty to the international tax framework, based on a shared understanding of where value is created in digital business models.

This is a global issue, which requires global action to solve in a coordinated way, in order to avoid the proliferation of unilateral tax measures and trade tensions. The EU Directive is the best method for implementation of the Pillar Two minimum effective tax rate within the EU, as it will allow for a consistent transposition, consistent with European law, by all Member States.

While the EU Directive has not yet been agreed, significant progress towards agreement was made during the French presidency of the Council of the European Union, and it is my expectation that unanimous agreement will be reached on the Directive this year.

The decision to join the global agreement was not taken lightly but I firmly believe this agreement brings a unique opportunity to reframe the international taxation architecture which has largely remained in place for almost a century.

Ireland looks forward to final agreement of the Directive soon and we remain actively engaged at the OECD where we are helping shape the detail of how the Pillar Two rules will work in practice, as we believe it is the best avenue to provide certainty for businesses.

Michael Lowry (Tipperary, Independent)
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334. To ask the Minister for Finance if he has considered the impact of the uncertainty of the delays in the adoption of the corporation taxation rate at European Union level on the capacity of companies to meet the administrative burden of compliance; and if he will make a statement on the matter. [38059/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland signed up to OECD global agreement in October 2021, with Pillar Two consisting of a minimum effective tax rate of 15% for large corporates. The European Commission published its proposal for the EU Minimum Tax Rate Directive on 22 December 2021.

Ireland has been fully engaged on the technical work regarding the proposed Directive throughout the first half of 2022. Though agreement has not yet been reached by all Member States, Ireland looks forward to this happening later this year. Ireland fully supports the proposal as it is balanced and provides the certainty and stability which businesses need by avoiding divergent, unilateral measures in different countries.

It is essential, both for businesses and Revenue authorities, that the administrative processes for implementation of the agreed global minimum tax are clear and operable in practice, and further Pillar Two technical work is continuing at the OECD on matters such as information filing obligations.

Furthermore, the revised implementation timelines also now allow for a more considered implementation, in consultation with stakeholders. The European Commission initially proposed that the Pillar Two rules would be effective from 1 January 2023, however, the current draft Directive now provides that the rules will be applied within the European Union for periods of account beginning on or after 31 December 2023. With filing not due until 18 months after the initial period of account, for most companies this would mean that the first Pillar Two returns would not be due until mid-2026.

Ireland is mindful of the need to maintain an environment of certainty for businesses. We intend to follow through on our commitment made in October 2021 to the OECD agreement as the best means of achieving that certainty.