Ibec, the group that represents Irish business, today noted the publication of the OECD/G20 BEPS programme of work for global tax reform. The group said that the proposals, if implemented, would represent the most fundamental change in global corporate tax policy in a century. Ibec also noted that some of the proposals, in particular proposals for a minimum effective global corporate tax rate, could pose significant challenges for Ireland’s FDI model over the coming decade.
Ibec Chief Economist Gerard Brady said: “Today’s publication from the OECD/G20 is a significant step in a process which may result in real change in the Irish business model. There is now clear renewed political momentum behind global multilateral tax reform through the OECD/G20 BEPS process. Proposals under Pillar 1 will mean some re-allocation of taxing rights to larger importing countries and, as a small exporting country, may mean the Irish exchequer will lose a proportion of its corporate tax base. Irish business, however, are more concerned about proposals under Pillar 2 which would introduce a minimum effective corporate tax rate globally. It is crucial for small open economies that this rate, if introduced, is set at a level which focuses on addressing actual profit shifting concerns and does not infringe on our right to set competitive tax rates.
“Although we are early in the process, it is very likely that significant change is coming to how companies are taxed globally. The Irish Government will need to react proactively by significantly strengthening other areas of our FDI regime. This will require significant investments in areas such as education, innovation, and quality of life which we have failed to make over recent years.”