Irish Examiner view: Tax deal shows we're part of the solution rather than the problem

Agreeing to jettison our 12.5% corporate tax rate is the price of being good Europeans.

Paschal Donohoe speaks during a news conference following a meeting of European Union finance ministers in Brussels, last July. Picture: Valeria Mongelli/Bloomberg

Ireland’s inevitable acceptance of an increase to its low corporate tax rate for very big companies may cost the exchequer in the region of €2bn in the short run.

However, if the terms are implemented after some to and fro in Washington, this can be regarded as a good result for Paschal Donohoe, the finance minister.

The uplift to 15% for the powerful multinationals provides no shock, and they will already have discounted its impact. The global average rate for corporation tax is 23.85%.

Ireland is unusual in that its corporate tax take is highly concentrated, with 10 overseas-owned companies generating 56% of total revenue last year. Overall, some 1,550 foreign-owned and Irish-owned multinationals and their subsidiaries will be affected, while 160,000 other businesses are out of scope.

Agreeing an increase is the price we pay for being seen as part of the solution, rather than part of the problem. Of the 140 countries engaged in the process, just Kenya, Nigeria, Pakistan, and Sri Lanka have opted to shun the agreement.

Another EU country that will find it necessary to review its position as being part of a larger whole is Poland, which is undergoing its own 'Jackie Weaver moment', telling European courts that they “have no authority”.

The detail of the treaties indicate otherwise, and most Poles are in favour of EU membership, but this is a further increase in tension with a country from which €57bn of coronavirus recovery funds have already been withheld. 

For now, Poland seems to be out of step with its neighbours.