How do you say “we will have to wait and see” in a dozen different ways? Paschal Donohoe is having to sit tight and wait to see if a deal emerges on global corporate taxation at the OECD – and in the meantime is having to take sitting on the fence to a new level. The Republic is committed to finding an agreement, he says, but is willing to stay out of one if it isn’t in our interest. We will go round this circle a few more times in the weeks ahead.
EU commissioner Paolo Gentiloni played the good cop after his meeting with Donohoe in Dublin yesterday, saying that he hoped a way could be found for the State to sign up to a deal, and that the European Commission understood the State’s concerns and so on.
Donohoe has a point when he identifies a phrase in the draft OECD agreement – that the minimum global corporate rate will be “at least” 15 per cent – as problematic. Whether this is clarified in the weeks ahead is vital. So will be indications from the US about the path of president Joe Biden’s own tax proposals through Congress. As Gentiloni put it, it is hard to see a global deal happening without the US, which has reignited the OECD tax agenda, being part of it.
Donohoe will wait and see how these two parallel tracks – at the OECD and in Washington – will play out ahead of a vital OECD meeting in early October, just before budget day. The real difficulty will be if the OECD pushes ahead, but it is unclear whether Biden can get some key measures through Congress.
In an interesting intervention, the big US companies represented by the American Chamber of Commerce Ireland said that if a deal was done, it would be in the Republic’s interests to sign up. Meanwhile, the Consultative Committee of Accountancy Bodies, representing Ireland’s accountants, has warned that up to 100,000 jobs could be at risk in the longer term if the Republic loses control of its tax rate.
There is no easy way out of this one. And Donohoe can’t sit on the fence forever.
