Despite an increasingly isolated position, Ireland continues its frontal opposition to the plan for a global corporate tax rate. In their latest proposal, the United States suggests a rate of 15%, much lower than that of 21% initially advanced in April. The response from Paschal Donohoe, the Irish finance minister, was not long in coming: “We have very serious reservations. “ In an interview with Sky News on May 25, he estimates the Irish rate of 12.5% will still be in place “In five or ten years”.
Mr Donohoe echoed Ireland’s usual argument. We must allow a small eccentric country like his, which cannot use the arguments of the great economic powers, to play on tax competition. According to him, 15% is at such a level that “Only countries and economies of a certain size will be able to benefit”.
Eire has made its level of corporate taxation a totem pole. Its importance dates back to the early 1980s, when the country was one of the poorest in the European Union (EU). At the time, with the consent of Brussels, Dublin introduced a 10% tax on manufacturing companies. Gradually, low taxation spread to financial services, then grew, in the early 2000s, to 12.5%.
The strategy is working. Ireland, which also has the advantage of being an English-speaking nation, first attracted many American factories intended to supply the European market. Now, all the digital giants are present, from Facebook to Apple. “I am proud of the role [que ce taux d’imposition] has played a role in our development ”, explains Donohoe.
European pressure
In four decades, Green Erin has never hesitated on its tax strategy. Even at the height of the financial crisis, when it had to accept an EU bailout in 2010, no government wanted to touch the 12.5% rate. There was a quasi-consensus in the political class on the fact that the only way to rebuild the economy was through foreign investment, and that we should especially not instill doubt in investors.
The reality of Irish tax giveaways has long been far beyond the mere nominal rate. The state authorized many arrangements that allowed multinationals to pay rates close to zero. The ‘double Irish’, a proceeding consisting of two nested Irish companies, was one of them.
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