Ireland will have to build some sort of coalition of small states to push back against the G7 plan to overhaul global tax, experts have said.
The Group of Seven of the most powerful western economies (the US, Japan, Germany, France, UK, Italy, and Canada) struck an agreement on Saturday to promote a new way of taxing multinationals. It aims to upend a global tax regime that has underpinned Ireland’s prosperity for decades.
Economists and tax experts said the G7 accord in London was more far-reaching than expected. It seeks to tax multinationals at a rate of "at least" 15% and blows a hole in the longstanding principle that large companies are taxed in the location they have chosen to place substantial bases, to the benefit of Ireland. Experts said the Government will need to look to a coalition of smaller states.
Brian Keegan, director of public policy at Chartered Accountants Ireland, said the G7 accord could hit the amount of corporate tax revenues and have implications for future foreign direct investments.
UCC economist Seamus Coffey said the €11.8bn collected in corporate tax revenues last year would likely be reduced if more taxing rights were given to the "market countries".
University of Limerick professor Stephen Kinsella said the plan could pose risks to Ireland retaining foreign-owned investments, such as pharmaceuticals, which is important to the Cork region.