‘Historic’ corporate tax changes to take effect from next January
Minister for Finance Michael McGrath has said changes to Ireland’s corporate tax rate will take effect from next January and described it as a “historic change” in the country’s corporate tax regime.
Speaking on RTÉ’s This Week, he said it is one of two planned changes and arises from an international OECD agreement, which Ireland and over 130 other countries signed up to in 2021 with two key elements.
He said various options were considered for this Pillar 2 part of the OECD deal.
“The option that we have now arrived at is that we will have what is called a qualified domestic minimum top up tax of 2.5%, which will only apply to large corporates with a turnover of at least €750m. “
He said it will be legislated for the in Autumn Finance Bill and that a Feedback Statement has been published in relation to the consultation.
“It is a very detailed complex piece of work. We published indicative aspects of the legislation which will be required.”
He said for a long time there was a 12.5% rate here and that is now changing to 15% for large corporates.
Separately, he said under Pillar 1 of the OECD deal, there will be a reallocation of taxing rights.
“When my department look at the impact of the two pillars in the round, it is Pillar 1 which will result in a negative impact on Ireland because of the small size ‘relatively’ of the domestic market here.”
He said it is less advanced than Pillar 2 and detailed discussions at OECD level are continuing.
“Ireland is at the table, we are very much involved in helping to shape the nature of those discussions and the direction of the emerging conclusions. It remains to be seen when there will be final agreement.”
He said Pillar 2 could take effect first.