After all, Ireland agrees to a global minimum corporate tax rate of 15%. That was announced yesterday by Irish Finance minister Pascal Donohue.
According to opinion polls in Ireland, the majority of the population was against the introduction of the global minimum tax rate. There are three reasons why the Irish are coming after all. First of all, they considered what would happen if they did not participate.
A second factor which has convinced the Irish government is that the text has been slightly amended. At first, the text stated that the tax rate would be ‘at least’ fifteen percent, but that has now been deleted. The Irish were very afraid that 15% was just the beginning, and then it would go up.
A final factor is that the tax rate only applies to companies with a worldwide turnover of more than 750 million. And that means that for 160,000 Irish companies the rate of 12.5% remains normal.
It remains to be seen whether the large tech companies, which once deliberately established themselves in Ireland because of the low tax rate, want to remain in the country after new laws will be enforced. They are there and have great activities there. Ireland is also the only fully English-speaking country in the European Union. The level of education of the population is good, the labour market is flexible. There are all kinds of legal structures that fit those companies. So we don’t think many companies are going to run away immediately.
In addition to Ireland, Estonia also joined the global minimum rate. Hungary is still the main obstacle, although not every state has to agree. It is of course preferable to have as many countries as possible participate. A small number of 140 countries are being targeted, of which about three are now in doubt. The impression is that Hungary will eventually come around.