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For those like me who were confused by what's the deal with removing the "at least" 15% for Ireland: > The vast majority of companies will not be impacted by t

For those like me who were confused by what's the deal with removing the "at least" 15% for Ireland: > The vast majority of companies will not be impacted by the proposed increase in the 12.5 per cent corporate tax rate, Taoiseach Micheál Martin had said earlier in relation to this point. > Speaking in Dublin ahead of a Cabinet meeting, he confirmed the Government’s intention was still to only apply the new 15 per cent rate to companies with turnovers of more than €750 million, in line with OECD proposals on the matter. https://www.irishtimes.com/news/politics/ireland-s-corporate-tax-rate-set-to-rise-to-15-as-part-of-global-deal-1.4693782 https://www.irishtimes.com/news/politics/ireland-s-corporate...

anonymousDan 5y ago
The reason is we (quite reasonably) don't want to sign up to something and then have the goalposts shifted in a few years such that the minimum rate is increased again. Frankly I'm a bit annoyed we even signed up to this. If the US really cared about tax avoidance by their MNCs they could fix the problem tomorrow.
- pavon 5y ago
  Would you mind elaborating your thoughts on the last bit? I don't pretend to be an expert on international corporate taxation, but in the case of Ireland it didn't sound like US companies are avoiding taxes in the US. All the complaints are about revenues earned outside of the US, which should be taxed outside of the US. So I can definitely see why the EU would be upset with Ireland's policies, and support participating in treaties to make the situation more fair, but it seems inappropriate for the US to unilaterally "fix" a disagreement that is largely between EU member nations.
  - yojo 5y ago
    My understanding is that schemes are often employed to shift profits that occurred in high tax regimes to lower tax ones. E.g. company registers their IP to subsidiary in <low_tax_nation>. That subsidiary charges crazy royalties for the rest of the company to use the IP in <high_tax_nation>. The effective earnings in the high tax regime is low or zero because of the “cost” of licensing the IP. Meanwhile the subsidiary in low tax land makes bonkers profits on some extremely lucrative licensing. You can try to shut down these shenanigans playing legal whack a mole, but the law moves slower than the corporations. Or you can just set a global floor on taxes and not have to worry about keeping up with the latest corporate nonsense.
- ballenf 5y ago
  Yeah, you have to wonder if the US cares more about this framework being in place and being able to dictate other countries policies more than actual tax rates.
  - adventured 5y ago
    It's not particular to the US. The US is doing this by pressure as a compromise because the European powers threatened something worse. The US would prefer to change absolutely nothing and let its major corporations continue to avoid taxes where they can internationally. Germany and France are overwhelmingly supporting this, because they benefit from damaging competing nations that have lower corporate income tax rates (eg Lithuania, Ireland, Hungary, North Macedonia, Montenegro, Romania, Serbia, Switzerland, Albania, Armenia, Bosnia, Bulgaria, Croatia). Both Germany (30%) and France (26.5%) have higher corporate income tax rates than the US and stand to benefit more by forcing the rest of the world to a higher base and or otherwise preventing any further decline in rates. This helps those two nations re-level Europe to their advantage, and stop any further race to the bottom on rates (where Germany and France can't follow). For those two nations it's a particularly relevant matter in Europe. They've watched as Ireland has rapidly become one of the richest nations in world history by leveraging a very low corporate income tax rate. Ireland is taking economy, growth, away from them. In the time that Ireland's GDP per capita has massively exploded higher, Germany has seen a GDP per capita decline over 26 years. Read that again. 26 years, an inflation adjusted GDP per capita decline ($31.6k in 1995; inflation adjusted that's $57k today; their present GDP per capita is around $46k). A generation has been nearly lost to economic stagnation in Germany. France is in the same stagnation boat. And how has Ireland's GDP per capita performed in that time? $19k to $84k; an inflation adjusted 150% gain roughly over 26 years. Yeah. Now you understand what's going on - it's about knee-capping countries like Ireland, stopping their incredible climb. Ultimately this corporate income tax rule is a regressive attack by powerful nations on typically poorer, weaker or otherwise smaller nations. It dilutes a substantial means for them to compete to draw capital. France and Germany on one side. All those other nations I listed before on the other. It's quite obvious what's going on.
    - disgruntledphd2 5y ago
- walshemj 5y ago
  Why would the USA do this they are not losing any revenue over it.
klipt 5y ago
> only apply the new 15 per cent rate to companies with turnovers of more than €750 million So what stops a big corp from splitting itself into subsidiaries with turnover below that magic number?
- ashconnor 5y ago
  Pretty sure it's global revenues. That's the point of a global tax no? Edit: > There are two pillars to this agreement. Pillar 1 will see a reallocation of a proportion of profits to the jurisdiction of the consumer. Pillar 2 will see the adoption of a new global minimum effective tax rate applying to multinationals with global revenues in excess of €750m https://www.gov.ie/en/press-release/59812-ireland-joins-oecd-international-tax-agreement/ https://www.gov.ie/en/press-release/59812-ireland-joins-oecd...

anonymousDan 5y ago

The reason is we (quite reasonably) don't want to sign up to something and then have the goalposts shifted in a few years such that the minimum rate is increased again. Frankly I'm a bit annoyed we even signed up to this. If the US really cared about tax avoidance by their MNCs they could fix the problem tomorrow.

pavon 5y ago
Would you mind elaborating your thoughts on the last bit? I don't pretend to be an expert on international corporate taxation, but in the case of Ireland it didn't sound like US companies are avoiding taxes in the US. All the complaints are about revenues earned outside of the US, which should be taxed outside of the US. So I can definitely see why the EU would be upset with Ireland's policies, and support participating in treaties to make the situation more fair, but it seems inappropriate for the US to unilaterally "fix" a disagreement that is largely between EU member nations.
- yojo 5y ago
  My understanding is that schemes are often employed to shift profits that occurred in high tax regimes to lower tax ones. E.g. company registers their IP to subsidiary in <low_tax_nation>. That subsidiary charges crazy royalties for the rest of the company to use the IP in <high_tax_nation>. The effective earnings in the high tax regime is low or zero because of the “cost” of licensing the IP. Meanwhile the subsidiary in low tax land makes bonkers profits on some extremely lucrative licensing. You can try to shut down these shenanigans playing legal whack a mole, but the law moves slower than the corporations. Or you can just set a global floor on taxes and not have to worry about keeping up with the latest corporate nonsense.
ballenf 5y ago
Yeah, you have to wonder if the US cares more about this framework being in place and being able to dictate other countries policies more than actual tax rates.
- adventured 5y ago
  It's not particular to the US. The US is doing this by pressure as a compromise because the European powers threatened something worse. The US would prefer to change absolutely nothing and let its major corporations continue to avoid taxes where they can internationally. Germany and France are overwhelmingly supporting this, because they benefit from damaging competing nations that have lower corporate income tax rates (eg Lithuania, Ireland, Hungary, North Macedonia, Montenegro, Romania, Serbia, Switzerland, Albania, Armenia, Bosnia, Bulgaria, Croatia). Both Germany (30%) and France (26.5%) have higher corporate income tax rates than the US and stand to benefit more by forcing the rest of the world to a higher base and or otherwise preventing any further decline in rates. This helps those two nations re-level Europe to their advantage, and stop any further race to the bottom on rates (where Germany and France can't follow). For those two nations it's a particularly relevant matter in Europe. They've watched as Ireland has rapidly become one of the richest nations in world history by leveraging a very low corporate income tax rate. Ireland is taking economy, growth, away from them. In the time that Ireland's GDP per capita has massively exploded higher, Germany has seen a GDP per capita decline over 26 years. Read that again. 26 years, an inflation adjusted GDP per capita decline ($31.6k in 1995; inflation adjusted that's $57k today; their present GDP per capita is around $46k). A generation has been nearly lost to economic stagnation in Germany. France is in the same stagnation boat. And how has Ireland's GDP per capita performed in that time? $19k to $84k; an inflation adjusted 150% gain roughly over 26 years. Yeah. Now you understand what's going on - it's about knee-capping countries like Ireland, stopping their incredible climb. Ultimately this corporate income tax rule is a regressive attack by powerful nations on typically poorer, weaker or otherwise smaller nations. It dilutes a substantial means for them to compete to draw capital. France and Germany on one side. All those other nations I listed before on the other. It's quite obvious what's going on.
  - disgruntledphd2 5y ago
walshemj 5y ago
Why would the USA do this they are not losing any revenue over it.

klipt 5y ago

> only apply the new 15 per cent rate to companies with turnovers of more than €750 million So what stops a big corp from splitting itself into subsidiaries with turnover below that magic number?

ashconnor 5y ago
Pretty sure it's global revenues. That's the point of a global tax no? Edit: > There are two pillars to this agreement. Pillar 1 will see a reallocation of a proportion of profits to the jurisdiction of the consumer. Pillar 2 will see the adoption of a new global minimum effective tax rate applying to multinationals with global revenues in excess of €750m https://www.gov.ie/en/press-release/59812-ireland-joins-oecd-international-tax-agreement/ https://www.gov.ie/en/press-release/59812-ireland-joins-oecd...