Ireland and Estonia have put an end to their reluctance and have said that they will sign the international agreement that sets the minimum corporate tax at 15%. In Ireland the reform could be implemented in 2023. Dublin now has a corporate tax of 12.5%.
Paschal Donohoe, Irish Finance Minister, said: “It is the right decision. It is a sensible and pragmatic decision taken by the Government for the benefit of our country and, ultimately, a decision that I believe will be fundamental for companies and investors have long-term security, which in turn will benefit many thousands of employees in the future. “
It was the G7 first, in June, and then the G20, in July, who backed this idea. The OECD countries that did not sign the agreement were Ireland, Estonia and Hungary, compared to the other 130 that did. Now only Hungary remains to say if it signs the agreement.
The countries involved in the negotiation of a new global fiscal framework for multinationals will try this Friday to close the process with the aim of taking it to the G20 summit at the end of the month and that it can be applied from 2023.
Under the name of “inclusive framework” and coordinated by the Organization for Economic Cooperation and Development (OECD), the parties will try to close the pending fringes of the agreement of July 1.
This agreement represented what was then called a “historic” commitment to create a global tax framework for large companies, to which 130 of the 139 participating countries and territories joined, although since then there are already 134 and 140, respectively.
Tomorrow’s discussion, electronically, seeks to determine if more countries join the consensus and to close the last concrete details, as well as the implementation process.
“Friday’s meeting is key and we will do our best,” OECD Secretary General Mathias Cormann said yesterday as he closed the organization’s annual ministerial meeting.
The commitment was articulated around two pillars, the first of which provides for a generic tax on large companies, whether technological or not, with a global turnover of more than 20,000 million euros and a profitability (ratio between profits and income) greater than 10%.
All countries in which these companies have revenues of more than one million euros (or 250,000 euros in small states) will have the right to receive a part of the tax paid by the companies.
These countries will distribute between them between 20% and 30% of the residual profit, once the country where the company is headquartered has received the corresponding profitability tax.
Pillar 2 established a minimum corporate tax of “at least 15%” for companies, although since July new contacts have diluted that commitment and the currently most likely figure would be a minimum of 15%.
If the pact is closed, the commitment would be endorsed by the G20 summit to be held in Rome on the 30th and 31st of this month, and from then on the practical modalities of implementation would begin to be discussed.
The goal is to begin to apply it in practice in 2023, something that is considered “very ambitious”, according to various sources in the organization.
Meanwhile, countries that apply the so-called “Google tax” to large digital companies, such as France, may continue to apply that tax.
The July deal came after the fundamental shift in US stance with the January rise to power of President Joe Biden.