In the face of sharp differences with Ireland, French president Emmanuel Macron yesterday claimed he was not trying to pressure Dublin into backing a new global deal on corporate tax.
Mr Macron’s remarks were quickly dismissed by Irish sources who said French officials urged Ireland at meetings yesterday in Dublin to back an Organisation for Economic Co-operation and Development overhaul of global tax rules. “They were pushing for us to sign up to the OECD,” said one Irish figure.
Despite discord in private exchanges, Mr Macron adopted a positive tone and expressed confidence that “we will find the right path together” on tax.
Although Ireland is one of a handful of countries that have refused to support the OECD plan for a global tax on business profits of “at least” 15 per cent, the French president said that the framework made sense.
“I am not one to put pressure on my friends. I know your country is having a debate. What you did in the past was unique and was based on low corporate tax,” he told a press conference in Dublin. “The post-Covid-19 world is different. It requires us to change the classic business model.”
Ireland’s 12.5 per cent tax rate on business profits has been a source of friction for decades with France, which claims it is too low. Although most global countries have backed the OECD plan, it remains highly problematic for government because of its insistence for many years the rate would never change.
Deep anxiety
In talks with French counterparts, Irish officials signalled a willingness in principle to back the OECD plan but only if the precondition that the rate should be “at least” 15 per cent was removed.
That reflects deep anxiety in Dublin that accepting the OECD plan as it stands would open the door for Brussels to attempt to impose a higher rate – at an uncertain level – when the plan is transposed into EU law. Ireland believes such a regime would compromise foreign direct investment policy.
“We said that the ‘at least’ is the big issue,” said one Irish figure of the talks with France. “We can’t sign up for something unless we know what we’re signing up to.”
French officials said they recognised Ireland wanted reassurance on actual future tax rates, Although Irish sensitivities were acknowledged in Paris, French officials were noncommittal on whether they would do anything about them.
French finance minister Bruno Le Maire told reporters Ireland and France were working on a European approach to a minimum corporate tax rate.
But senior Irish sources said Dublin’s focus was the OECD process, which is separate.
One senior source noted France was likely to propose European action on a minimum rate during its EU presidency in the first half of next year, but it will require unanimity, meaning that Ireland could potentially block the proposal.
