Facing pressure from the administration of U.S. President Joe Biden, Ireland has stepped away from its position as a haven for global companies with the abandonment of the country's low-tax business model.
With a low corporate tax rate that has been in place for approximately two decades, Ireland has served as the European headquarters of such large, multinational corporations as Facebook and Google, according to coverage by Yahoo! Finance. As recently as July, Ireland had rejected the global deal on corporate taxes that has been championed by Biden, but the country changed its tune ahead of the October 8 meeting of the Organisation for Economic Co-operation and Development (OECD).
“This agreement is a balance between our tax competitiveness and our broader place in the world,” Paschal Donohoe, Ireland’s finance minister, was quoted as saying in the story. The move “will ensure that Ireland is part of the solution in respect to the future international tax framework.”
The minimum tax rate put forward by the international agreement is not a huge jump for Ireland, the story states. The country formerly set it's rate at 12.5 pc, but has joined around 140 other countries in agreeing to a 15pc rate.
Yahoo! Finance estimates that the new rate will affect approximately 1,500 companies employing half a million workers. However, smaller firms with an annual turnover of less than €750 million ($865 million) will continue to pay the 12.5pc rate.
The Independent recently reported that Kenya, Nigeria, Pakistan and Sri Lanka remain the sole holdouts for the OECD agreement.