Ireland moves step closer to ditching 12.5% corporate tax rate

The Irish Examiner understands that a reference in the OECD document to a new global rate of “at least” 15% has been excised in the latest version of the plan presented to Finance Minister Paschal Donohoe on Monday. Photo: Valeria Mongelli/Bloomberg

The greatest barrier to Ireland abandoning its 12.5% corporate tax rate has been removed from the latest draft plan handed to Government.

The Irish Examiner understands that a reference in the OECD document to a new global rate of “at least” 15% has been excised in the latest version of the plan presented to Finance Minister Paschal Donohoe on Monday.

This development has raised an expectation that the Cabinet will approve the formal adoption of the global rate at its meeting on Thursday. It is understood that the new minimum rate of 15% is solid, and delivers the certainty Mr Donohoe and the government has been seeking.

Since the Irish Examiner first reported on the Government’s intention to move away from the 12.5% in July, Mr Donohoe has made clear that the phrase “at least” was the greatest impediment to Ireland signing up to the OECD deal.

Its removal now opens the way for Ireland to sign up to the Framework Agreement, which is expected to be finalised on Friday.

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Taoiseach Micheál Martin is on his way to Slovenia to attend a summit of EU leaders and it is expected he will seek assurances from his colleagues that Ireland will not be forced to further raise its corporate tax rate in the future if it signs up to the OECD deal.

Mr Donohoe and his officials have been engaged in intensive negotiations with the OECD in recent days in a bid to see Ireland formally adopt the global deal.

Several senior government sources have told the Irish Examiner that it is their expectation that the Cabinet will be advised to adopt the OECD plan on Thursday amid a desire that the country does not become a “pariah” on corporate taxation.

There is some confidence that any increase in the corporate tax rate would not apply to companies with a turnover of less than €750m.

This would allow the country to keep the 12.5% rates for many firms here and it would be viewed as being particularly advantageous to indigenous companies.