LONDON – Ireland, the European home of tech giants like Apple and Google, is seeking a compromise on global taxation that recognizes “the role of legitimate tax competition,” the country’s finance minister told CNBC on Friday.
Ireland is known for offering a low corporate tax rate of 12.5% and a recent deal between the seven most advanced economies may call that into question.
The G-7 finance ministers agreed this month that there should be a minimum global corporate tax rate of 15%, as proposed by the Biden government, to resolve calls for a fairer tax system.
“We will be very involved in the OECD process in the coming weeks and months, and I hope that an agreement can be reached that recognizes the role of legitimate tax competition for small and medium-sized economies,” Finance Minister Paschal Donohoe told CNBC .
The G-7 plan is discussed at the OECD level and is discussed by the G-20 heads of state and government. The idea is to get as many countries as possible to support the proposal so that the chance of implementation is higher.
“We still have some time to reach a final agreement, so it is difficult for me to say what this compromise could look like. But I think it is in everyone’s interests to find a compromise,” said Donohoe, said Annette Weisbach of CNBC in Luxembourg.
The European Commission ruled Apple had obtained illegal tax breaks in Ireland in 2016 and ordered Dublin to reclaim € 13 billion ($ 15.49 billion) from the tech giant. Ireland and Apple have appealed the decision and the case is now under review by the highest European court.
Taxation has become particularly important in the wake of the Covid pandemic, as many countries are desperately looking for new or stronger sources of income to repay the debt incurred during the crisis.
First EU Covid payments
The European Union raised € 20 billion earlier this week through a 10-year bond sale as part of a larger € 800 billion stimulus plan. This was the first time that the European Commission opened up the markets on behalf of the 27 EU countries and proved to be attractive to investors as it was more than seven times oversubscribed.
“In short, I expect the first disbursements in the second half of July,” EU budget commissioner Johannes Hahn told CNBC on Thursday about when the money borrowed from the markets will arrive at the individual EU countries.
Before the first disbursements were made, the Commission had already approved some of the recovery plans – the documents in which the countries outlined how they will use the funds. This is the case in Portugal, Spain, Greece, Denmark and Luxembourg. Further approvals are expected in the coming days.
“It has been criticized that we have introduced the program too slowly in Europe, but in fact it is because the European Commission and all of us as Member States want the money to be used for the right purposes,” said Luxembourg Finance Minister Pierre Gramegna told CNBC on Friday.