Donohoe: 15% corporate tax rate 'pretty likely' next year

Finance Minister Paschal Donohoe: The new tax rate will probably reduce Ireland’s annual corporate tax receipts by around €2bn, with that accruing “over a number of years”.

Finance Minister Paschal Donohoe has said he fully expects the OECD’s agreed 15% global corporate tax rate for large multinational companies to come into being, as targeted, by next year, with the chances of it happening by then becoming clearer by May.

However, he has reiterated his view that the move will not damage Ireland’s attractiveness to foreign multinationals looking to invest and locate overseas.

He said the rate is pretty likely to be delivered and that there is “a pretty good chance” the new rate will be in place next year, though not definitely.

Mr Donohoe was speaking at an event organised by CPA Ireland, formerly Certified Public Accountants in Ireland. 

He said while there is no room for complacency, Ireland’s foreign direct investment  attractiveness remains strong.

“I’d be very optimistic about our ability to retain and grow where we are with our foreign direct investment pipeline. Proof of that is in the number of foreign direct investment announcements made since we indicated the move to 15%,” he said.

Mr Donohoe cited the recent announcement by Eli Lilly that it is planning a major expansion of its existing Irish operations through a new €400m biopharmaceutical manufacturing facility in Limerick, which will deliver 30 jobs, as proof that Ireland’s corporate tax move from 12.5% to 15% won’t be hugely damaging.

“It’s a really clear example of how the move to 15% has not impacted on the attractiveness of Ireland to employers that are here already,” he said.

Mr Donohoe reiterated that the new tax rate will probably reduce Ireland’s annual corporate tax receipts by around €2bn, with that accruing “over a number of years”.

The minister said the implementation of the latest National Development Plan is critical, as is gaining awareness of where the country is in terms of competitiveness and cost-of-living issues.

Regarding inflation, Mr Donohoe said the Government is looking at additional measures to help consumers’ cost of living struggles, with the just-announced energy credit scheme, set to launch next month, the main one.

However, he said a 0.7% decrease last month was significant despite inflation still at 5%. Mr Donohoe said it was worthwhile mentioning that many of the causes of currently high inflation “are issues outside the control of the Government”.

He reiterated the need to phase out emergency Covid business supports, noting that the EWSS cost €420m in December alone.

“We will go back to the kind of supports and facilities that we had in place before the pandemic, through Enterprise Ireland, through the IDA, and through our local authorities,  which I think many acknowledge were good. We’re not going to go to nil but we have to move away from the emergency levels of support that we’ve had in place for so long."