Finance Minister Paschal Donohoe said he expected the OECD-agreed global corporate tax rate of 15% for large multinational companies to come into force, as planned, by next year, with the chances of that happening by then becoming clearer by May.
However, he reiterated his view that the move will not harm Ireland’s attractiveness to foreign multinationals looking to invest and set up overseas.
He said the rate is quite likely to be enforced and there’s a “very good chance” the new rate will be in place next year, but not permanently.
Mr Donohoe was speaking at an event organized by CPA Ireland, formerly Certified Public Accountants in Ireland.
He said that while there is no room for complacency, the attractiveness of foreign direct investment in Ireland remains strong.
“I would be very optimistic about our ability to maintain and grow where we are with our foreign direct investment pipeline. Proof of this is the number of foreign direct investment announcements made since we signaled the move. at 15%,” he said.
Mr Donohoe cited Eli Lilly’s recent announcement that it was planning a major expansion of its existing Irish business through a new €400 million biopharmaceutical manufacturing plant in Limerick, which will create 30 jobs, as evidence that Irish corporation tax going from 12.5% to 15% won’t be hugely damaging.
“It’s a very clear example of how the move to 15% hasn’t impacted Ireland’s attractiveness to employers who are already there,” he said.
Mr Donohoe reiterated that the new tax rate will likely reduce annual corporation tax revenue in Ireland by around €2 billion, which will accumulate “over a number of years”.
The Minister said that the implementation of the latest national development plan is essential, as is awareness of the country’s situation in terms of competitiveness and the cost of living.
On inflation, Mr Donohoe said the government was considering additional measures to help consumers combat the cost of living, with the energy credit scheme just announced and expected to be launched next month, the principal.
However, he said a 0.7% drop last month was significant despite inflation still at 5%. Mr Donohoe said it was worth mentioning that many of the causes of the current high inflation “are issues beyond the control of the government”.
He reiterated the need to phase out emergency Covid aid to businesses, noting that the EWSS cost 420 million euros in December alone.
“We will return to the kind of support and facilities we had in place before the pandemic, through Enterprise Ireland, through IDA and through our local authorities, which I think many recognize to be good. We’re not going to fall into nothingness, but we need to move away from the emergency support levels we’ve had in place for so long.”