Irish Finance Minister Paschal Donohoe. RollingNews.ie photo
By Ray O'Hanlon
The headline sure caught the eye: "Ireland, loved by Biden, is obstacle to tax deal."
The headline was atop a report in The Hill, the widely read newspaper focusing on Capitol Hill and U.S. politics.
The report told readers that "one of the countries that poses a major obstacle in the push toward a global minimum tax rate has deep ties to President Biden.
"Ireland, a tax haven for many household name companies, would lose out if major industrial countries move forward with plans to subject multinational corporations’ income to a tax rate of at least 15 percent."
The report stated that finance officials in the wealthy Group of Seven (G-7) countries, which does not include Ireland, backed a global minimum tax rate of at least 15 percent in a deal announced over the weekend. The agreement is a win for the Biden administration, but many challenges remain before any international tax deal is finalized by a larger group of countries.
More than 100 countries are participating in international tax negotiations at the Organization for Economic Cooperation and Development (OECD), a group that includes Ireland. Part of those negotiations are focused on establishing a global minimum tax.
“I look forward now to engaging in the discussions at @OECD. There are 139 countries at the table, and any agreement will have to meet the needs of small and large countries, developed and developing,” Irish Finance Minister Paschal Donohoe said Saturday on Twitter after the G-7 announcement.
The Hill report continued: "Donohoe, who met with (U.S. Treasure Secretary Janet) Yellen during the G-7 finance ministers’ meeting, told The Irish Times that in their talks he 'continued to make the case for legitimate tax competition within certain boundaries and for the role of small- and medium-sized economies in the agreement that is yet to come.'"
The Hill report stated that a global minimum tax rate of 15 percent would have a significant impact on Ireland and its 12.5 percent rate, making it an attractive country for many multinational companies to set up offices.
"The pushback from Ireland could also strain relations with a country beloved by Biden. The president, who is often outspoken about his Irish heritage, has already met with Ireland’s prime minister, Micheál Martin, since taking office.
"During the virtual meeting on St. Patrick’s Day, Biden reaffirmed U.S. support for the 1998 Good Friday Agreement that ended the conflict in Northern Ireland.
"But the Biden administration also has made it a top priority to reach an OECD agreement on a global minimum tax, viewing such a deal as a way to ensure American companies won’t become less competitive if the U.S. raises its corporate tax rates. Biden has proposed paying for his infrastructure plan in part by increasing the corporate tax rate from 21 percent to 28 percent and by increasing an existing minimum tax on U.S. companies’ foreign earnings to 21 percent."