DUBLIN — Ireland doesn’t want to be seen as a tax haven and would prefer to be part of a new global agreement on corporate tax reform, Deputy Prime Minister Leo Varadkar said Tuesday.
In remarks designed to test Irish tolerance for a shift in policy, Varadkar emphasized that if Ireland were to hike its tax rate on corporate profits to the Organisation for Economic Co-operation and Development’s proposed global minimum rate of 15 percent, its existing 12.5 percent rate would still apply to most Irish firms.
Varadkar and other ministers have previously stuck to Ireland’s two-decade policy of setting a 12.5 percent headline rate on corporate profits — the lowest in western Europe — and vowed never to negotiate it away.
But on Tuesday, after a weekly Cabinet meeting, Varadkar appeared to warm to the idea for the first time, saying that if Ireland were to join the OECD-brokered plan, a higher rate in Ireland would apply only to multinationals that report turnover exceeding €750 million annually. Only a handful of Ireland’s more than 10,000 registered companies would meet that threshold.
“Any agreement we may or may not sign up to won’t impact the average Irish business, won’t impact even any large Irish business, or mid-caps. The 12.5 percent rate will stay in place for them,” Varadkar said outside Dublin Castle.
The Irish government is due to publish its 2022 budget on October 12. In years past, the finance minister always has included a promise not to touch the 12.5 percent rate. It is seen as critical to wooing and building investment by more than 700 American multinationals that have opened European operations here since the 1980s, including tech giants like Facebook, Microsoft, Apple and Google.
But when asked Monday to repeat that promise, Prime Minister Micheál Martin repeatedly declined.
Martin, currently in New York to take part in the United Nations General Assembly, said he could no longer give that assurance, citing Ireland’s ongoing behind-the-scenes negotiations with EU and OECD partners.
In Dublin, Varadkar, who led Ireland’s previous government and will succeed Martin to become prime minister once again on December 15, said Ireland has maintained “leverage and negotiating power” by not joining the 134 countries already backing the OECD plan.
But in the longer term, he conceded Ireland could suffer avoidable reputational damage as an OECD holdout.
“I think we’d certainly prefer to be part of any international agreement,” he said. “Ireland is not a tax haven, nor do we wish to be seen as a tax haven.”