New US corporate tax rate plan viewed as 'more tweak than transformation' 

US floats idea of a global minimum corporate tax rate of 'at least 15%' 

US treasury secretary Janet Yellen has argued for an ambitious effort to end a global “race to the bottom” on company taxes.

A perceived softening in the US stance on global corporate tax has been cautiously welcomed in Ireland, but is being viewed as more of a "tweak" than any real "transformation".

What it, ultimately, could mean for the security of Ireland’s 12.5% corporate tax rate remains unclear.

The US has floated the idea of a global minimum corporate tax rate of “at least 15%” in an attempt to accelerate an agreement between OECD members over how to tax multinational companies. A deal is being targeted this summer.

It is seen as being a more realistic idea than the Biden administration’s proposal for a global tax of 21% on US companies.

While the new 15% offer is being seen as a way of winning over countries which currently have lower corporate tax rates, any agreement would not be binding on the likes of Ireland. 

But, it would still likely heap more pressure on Ireland to raise its 12.5% rate — something which the Government remains opposed to, as the current rate is still a huge attraction to inward investment here.

“From an Irish point of view, the evidence that the US is willing to step back from its initial position of a 21% global minimum [rate] is a positive development,” said Dermot O’Leary, chief economist at Goodbody.

“There is still a lot up for grabs in this debate, though, around the details. We may not know those until the end of the year,” he said.

Austin Hughes, chief economist with KBC Bank Ireland, said the overall picture on corporate tax remains unclear and “very fluid”. He described the US’ change in stance as a “tweak rather than a transformation”.

Nevertheless, he said it was encouraging in that it could prove to be a realisation on the US government’s part that “you can’t just slap on a very large tax and expect economic activity to be unaffected”.

“Hopefully, it’s a reordering of priorities of what we should be trying to do with corporate tax — having an efficient tax system or just trying to punish ‘the bad guys’,” he said.

US treasury secretary Janet Yellen has argued for an ambitious effort to end a global “race to the bottom” on company taxes.

“It is imperative to work multilaterally to end the pressures of corporate tax competition and corporate tax base erosion,” here department said. 

“Treasury underscored that 15% is a floor and that discussions should continue to be ambitious and push that rate higher,” it said. 

The offer moves the US closer to the 12.5% rate that had been discussed at the OECD before the US re-engagement in the negotiations following Joe Biden’s election as president.

European finance ministers are supportive, with German finance minister Olaf Scholz describing the move as “big progress.” His French colleague, Bruno Le Maire, said the proposal was a “good compromise,” while cautioning that it doesn’t remove the need for an agreement on the treatment of technology giants.

-additional reporting Bloomberg