Hit of €2bn to exchequer revenues from global tax accord 'still best estimate for now'

Paschal Donohoe tells Oireachtas finance committee the new minimum rate will be applied evenly across Europe

Minister for Finance, Paschal Donohoe: €2bn hit to the Irish exchequer is the best estimate at this time. 

Finance Minister Paschal Donohoe said he won’t revise the longstanding estimate that the Irish exchequer will take a €2bn hit in annual corporation tax revenues until key technical details of a global tax overhaul become much clearer.

Mr Donohoe also told the Oireachtas finance committee that Ireland bringing into force the new tax accord through an EU directive had the advantage that the rules would be evenly applied across Europe.

Ireland last month signed up to the global tax accord setting a minimum effective tax rate of 15%. Significantly, the accord also shook up the reallocation of taxing rights to the benefit of much more populous countries where multinationals make the bulk of their revenues. 

More than most, the Irish exchequer relies on corporation tax revenue from a handful of multinationals for a significant chunk of all tax revenues. Last year, Ireland the exchequer raised almost €12bn from corporations, or around 20% of all tax revenues.

Sinn Féin finance spokesperson Pearse Doherty said he had serious concerns that the EU would have influence over domestic taxing affairs. Picture: Gareth Chaney/Collins

Many tax experts have said the agreement marks a significant overhaul in countries such as Ireland losing sovereignty over corporation tax matters. The existing global tax regime had served the interests of Ireland remarkably well over at least three decades.

Pressed by Sinn Féin finance spokesperson Pearse Doherty, Mr Donohoe said the €2bn revenue hit remained the best estimate. He would likely be able to issue an update in the second quarter next year.

Mr Doherty said he had “serious concerns” the EU would for the first time have influence over domestic taxing affairs and that Ireland was giving up its veto over tax affairs by not legislating in its own right.