Donohoe: Ireland to tap small countries to help shape global tax accord this year   

In the wake of the G7's initiative, the finance minister said Ireland will seek common cause with smaller nations

Finance minister Paschal Donohoe pointed out there are 139 countries at the table 'and any agreement does need to get the agreement of small and large countries, developed and developing'.

Ireland will tap other small countries to influence the outcome of talks for a wide-ranging tax agreement to overhaul the way multinationals pay their taxes, finance minister Paschal Donohoe has said. 

Speaking to reporters, Mr Donohue reiterated the exchequer will likely lose around €2bn a year in corporate tax revenues under the current proposals, but insisted Ireland would nonetheless retain its attractiveness as a destination for foreign investment. 

His comments came after a G7 gathering of the wealthiest western countries on Saturday agreed among themselves that multinationals should face a global minimum tax rate of at least 15% on their corporate profits, no matter where they operate in the world. The accord has in its sites the likes of Apple, Pfizer, Google, and Microsoft, which have significant bases in Ireland.

G7 went further than expected

The G7 countries — the US, Japan, Germany, France, the UK, Italy, and Canada — went much further than many had thought possible by agreeing on a proposal to upend the current global regime. The big nations propose allocating taxing rights by "the market" or country where multinationals make most of their revenues.  

Irish economists and tax experts have said that this key part of the G7 agreement — if it were to secure wider support among the G20 and all 139 countries participating in a process driven by the OECD — would likely mean Ireland will attract fewer investments in the future.                                        

Mr Donohoe said the G7 tax accord was "an important signpost" that a wider agreement would be struck at the OECD talks. He expected agreement before the end of the year. 

Ireland's common cause with smaller countries

However, Ireland will seek to find common cause among small and medium-sized countries who share the same interests in the shaping of any wider accord, he said.        

"It is also relevant that there are 139 countries at the table and any agreement does need to get the agreement of small and large countries, developed and developing," Mr Donohoe said.

He was confident "we will see other open small economies and medium-sized countries state what their national interests will be under the [OECD] process", he said.           

Mr Donohoe would not identify or say how many small and medium-sized countries the Government would try and work alongside in the coming months. 

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Asked about reports that the British government — a member of the G7 and co-signee of the weekend agreement — would seek to exempt the City of London from the proposed tax overhaul, Mr Donohoe said such reports showed all countries will argue for their own national interests, at the OECD and elsewhere. 

In the same way, Ireland has "national interests that we are looking to protect", he said.

The stakes have risen for Ireland after US president Joe Biden put the weight of his new administration behind global tax reform. Ireland has increasingly looked to multinationals to collect large amounts of revenues, with corporation tax receipts, ballooning from €4bn seven years ago to €12bn last year.