Friday, October 8, 2021

Ireland Caves to Pressure and Signs on to Normalized Tax Rates for Multinationals

After intense debate, Ireland has signed on for the plan to make technology companies pay 15 per cent tax everywhere. The Organisation for Economic Co-operation and Development (OECD) is ready to finalize an implementation plan hoped to secure a share of revenue from digital multinationals. Irish tax rules have allowed Apple, Google, Amazon, Facebook, LinkedIn, Microsoft, and others to use an arrangement to considerably reduce their tax bills. Ireland did so as part of an investment attraction strategy, and it worked well, with Ireland hosting lots of European offices and garnering many jobs.

Others around the world did not appreciate this, and, often, little tax was paid in jurisdictions where consumers actually consume technology companies' products. Governments naturally felt they were being deprived of tax revenue. The Republic of Ireland has an attractive rate for corporations at 12.5% and had, until now, refused to join the plan. Different Irish governments had fiercely defended the low rate, arguing such a rate attracted businesses to the country's small economy.

The core goal of the Base Erosion and Profit Shifting Project is to create a global minimum effective corporation tax rate of 15 per cent for multinationals with revenues in excess of €750 million. As of August 2021, 140 nations had signed up to that plan. Finally, in October, Ireland has signed on, as well.

Read about the OECD project here...

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