Donohoe warns if corporate tax deal doesn’t go through, they risk global trade wars

Failure to agree a minimum corporate tax rate of 15 percent risks reigniting global trade wars, the finance minister said.

Aschal Donohoe said there were “challenges” to finalizing an agreement agreed in principle by 137 countries including Ireland last October but has since been plagued by delays in the US and in the EU due to Minute objections from Hungary will be called into question.

“The absence of such an agreement and the absence of this agreement will bring us straight back to zero,” Mr Donohoe told an event organized by the American Chamber of Commerce Ireland on Friday.

“The failure to implement and progress where we are now actually increases the risk of trade disputes and will increase the challenges that global tax policy will face.”

Hungary’s about-face last month infuriated French Finance Minister Bruno Le Maire, who this week suggested the EU should bypass the Budapest veto.

He said Hungary is holding the EU “hostage” after previously agreeing to the deal and said a deal will come about “with or without Hungary’s consent”.

Tax matters require unanimity at EU level, but a process known as “enhanced cooperation” allows groups of countries to move forward alone.

Mr Le Maire said he was in talks with the EU on increased cooperation and had briefed US Treasury Secretary Janet Yellen on his plans.

The European Commission said this week that it was focused on reaching a unanimous deal, while a US Treasury Department spokesman said the US was “optimistic” that Hungary would sign up.

Mr Donohoe said he was “optimistic” the EU and US could agree on both elements of the tax deal – a 15 per cent tax and a shift in the taxing rights of large multinationals to other countries.

“I firmly believe that this is in our interest. The rest of the world is watching this process,” he said.

The 15 per cent rate would affect around 1,600 multinationals in Ireland with revenues in excess of €750m a year. The other part of the deal affects only the world’s 100 most profitable companies with revenues in excess of €20 billion and could cost Ireland up to €2 billion in lost tax revenue, the Treasury estimates.

Chamber President Catherine Duffy said any attempts to broaden the tax base should be “done in a way that does not compromise our international competitiveness and our ability to attract and retain jobs and investment in innovation.”

A large majority of companies surveyed by the American Chamber (79 percent) expect to add new jobs in the next 12 months, while 74 percent said they have hired in the past year.

Almost a third of companies said housing is the number one challenge Ireland needs to address in order for their business to expand.
Ms Duffy said the 2023 budget must be “sustainably financed” and include investment in affordable housing, childcare, healthcare, education, energy and cybersecurity.

Mr Donohoe said that “pragmatism” was needed ahead of Budget Day, warning again that there are “limits to what any government can do to address the effects of global change that are now unfolding”.

His comments came as Eurostat estimates that Irish prices rose 9.6 percent in June, well above the euro-zone average and the highest rate in almost 40 years.

“It’s higher and more persistent than originally expected,” Mr. Donohoe said of inflation.

“We also recognize the risk that rising inflation will erase the real impact of our spending on public services.”

While he said the government “will continue to do our utmost to help,” he warned that a spate of additional spending could risk “further fueling our inflationary challenges and further piling up public debt.” Donohoe warns if corporate tax deal doesn’t go through, they risk global trade wars

Fry Electronics Team

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