# G7 agree minimum 15% corporation tax



## odyssey06 (5 Jun 2021)

Impact on Ireland unclear to me from this article... are we likely to see a drop in our corporation tax revenue?
Or will things balance out as we arent taxing some of this revenue?

Under the scheme the companies will be forced to pay taxes in the countries they operate in and not just where they have their headquarters. 
The rules would apply to global firms with at least a 10% profit margin – and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries they operate.









						Donohoe says government could lose up to €2.2bn a year in corporate tax revenue if G7 deal implemented
					

Finance Ministers of the world’s seven richest economies agreed to commit to a global minimum corporate tax rate of 15% at the G7.




					www.thejournal.ie


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## bunny_ (5 Jun 2021)

I can see them all running operations in the Caribbean where there are no accounting and just paying the minimum tax - or am I wrong?

Irish Revenue is about 50 Billion, so 2 to 2.5 Billion is only a 4 to 5 percent loss... maybe a slight tax increase at the top rate would cover it, I don't know for sure...


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## kinnjohn (5 Jun 2021)

I would say the penny has dropped with Paschal, He now knows why they made him President of the Eurogroup,
I wonder will there be  High paid Jobs losses in tax planning and the cottage industries that sprang up around our low Corporation tax,
The 2 to 2.5 Billion is corporation tax loss, Hope the losses stop at that,
Just as well FG and FF are in power at present I think both spent Corporation Tax on outgoings that cannot be cutback without a big uproar,

Tax increases are going to cause a big uproar as well the sad thing is they can only hit their own support base for extra tax, not a nice position to find themselves in by all accounts,
They can either take back some of the corporation tax from the people they gave it to or tax their own support base more, I think the easiest way out is to tax their own support base they have nowhere else to go,


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## odyssey06 (5 Jun 2021)

Yeah media now reporting the figure

Donohoe has said Ireland could lose up to one fifth of its corporate tax revenue each year – some €2.2 billion – if the 15% rate agreed today at the G7 meeting is put in place.


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## skrooge (5 Jun 2021)

Department of finance estimates. Seems the fiscal council is a little more circumspect.









						Government's spending forecasts 'not realistic' - IFAC
					

The Irish Fiscal Advisory Council has said the Government's budgetary forecasts "lack credibility" and its spending forecasts are "not realistic".




					www.rte.ie
				




Could be more like €3.5 billion


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## Protocol (5 Jun 2021)

bunny_ said:


> Irish Revenue is about 50 Billion, so 2 to 2.5 Billion is only a 4 to 5 percent loss... maybe a slight tax increase at the top rate would cover it, I don't know for sure...



Tax and PRSI revenue 2019 = 80 bn






						Government Finance Statistics April 2021 - CSO - Central Statistics Office
					






					www.cso.ie


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## moneymakeover (5 Jun 2021)

The concern for Ireland is more the potential loss of foreign direct investment.

Previously Ireland didn't care about the loss of 12 billion tax bill for Apple

The real concern is job losses

Paschal will fight it citing Ireland needs such measures to level the playing field for small peripheral counrties.


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## kinnjohn (5 Jun 2021)

moneymakeover said:


> The concern for Ireland is more the potential loss of foreign direct investment.
> 
> Previously Ireland didn't care about the loss of 12 billion tax bill for Apple
> 
> ...


The problem is explaining how the large increases in corporation taxes got spent in the last few years on his watch,
When they see the wage income  levels in some of the small peripheral countries  I don't think they will listen to paschal for long,
I hope I am wrong but I think We spent the corporation tax on the wrong things in the last four or five years,
We knew this was coming and we spent like it was not going to happen,


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## bunny_ (5 Jun 2021)

@Protocol - You can't include PRSI as that's pensions & welfare... About €62 Billion excluding PRSI - but I think several billion are going on debt repayments so the spend is less than €60 Billion... I can't find it now but the figure came from RTE News - I'm willing to be corrected though


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## NoRegretsCoyote (5 Jun 2021)

bunny_ said:


> You can't include PRSI as that's pensions & welfare...


Yes you can, and should.

It's basically a tax like any other.


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## joe sod (5 Jun 2021)

moneymakeover said:


> The real concern is job losses
> 
> Paschal will fight it citing Ireland needs such measures to level the playing field for small peripheral counrties.


During the whole pandemic when money was being thrown round like snuff at a wake , taxation and how this was going to be paid for wasn't mentioned once, in fact the media studiously avoided the topic. Now with the economy about to open up suddenly all this talk about taxation, the ESRI has awoken from its slumber.
Paschal and Leo et al know whats coming down the road, my bet is that they both will leave for jobs in Europe. The lack of urgency in realing in the PUP , the commitments given to the green party on carbon taxes etc etc means that no responsible government will want to take charge, heck even Sinn Fein must be scared at the prospects of taking over, populism is about to meet cold hard reality


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## bunny_ (6 Jun 2021)

NoRegretsCoyote said:


> Yes you can, and should.
> 
> It's basically a tax like any other.


It is a tax, but it gets spent almost immediately... take 2015 from Table 1 from Protocol's link above, Total Revenue is 71.931 Billion, of which 50.750 Billion in Taxes and 12.324 Billion in Social Contributions --- then go down to Expenditures and Social Benefits where we spent 28.689 Billion --- so it gets spend even quicker on welfare than we bring in PRSI payments, the additional spend comes from general taxation....

Include PRSI or not, personal preference, it's still less than 5% which isn't a huge deal, more people in the top rate tax bracket will probably pay for any loss in revenue from less Corporate taxation... add another 1% to the top rate tax and it'll close the gap even more... I would like less tax by the way but we have some of the lowest tax to GDP in Europe so we can't complain too much either... Google: tax revenue to gdp ratio


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## Sophrosyne (6 Jun 2021)

Committing to the principle of a 15% *global *CT rate is one thing; implementing it is quite another.

Even if global agreement were to be achieved, the detail of what exactly "operate in" means would be difficult to pin down without numerous qualifications and refinements.


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## NoRegretsCoyote (6 Jun 2021)

bunny_ said:


> Include PRSI or not, personal preference,


It's not a personal preference.

Social insurance contributions are revenue of the general government sector under internationally agreed statistical standards.


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## bunny_ (6 Jun 2021)

NoRegretsCoyote said:


> It's not a personal preference.
> 
> Social insurance contributions are revenue of the general government sector under internationally agreed statistical standards.


And what standards would they be... out of interest?


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## Protocol (6 Jun 2021)

Yes, the General Govt (GG) is comprised of:

central govt
state govt
local
govt
social security funds


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## bunny_ (6 Jun 2021)

So everything gets lobbed in to the same pot, and PRSI pays for roads and road tax pays for social security and if you're short you borrow the rest through government bonds... is that correct?


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## Protocol (7 Jun 2021)

We are off-topic here.

PRSI goes into the SIF, yes.

The SIF is used to finance Social Insurance benefits (not Social Assistance).

If the PRSI receipts aren't enough, the Exchequer uses taxes to top up the SIF.

So in a sense PRSI is kept separate from tax.


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## kinnjohn (7 Jun 2021)

I agree with Protocol
you cannot include Prsi


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## Protocol (7 Jun 2021)

We are off-topic, we are meant to be discussing the impact of possible new worldwide CT rules


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## bunny_ (7 Jun 2021)

Google: "ESRI Broad-based tax increases may be needed to fund future public spending"

A percentage point on the lower tax rate & a percentage point on the upper tax rate would bring in an extra billion according to the ESRI

I'd love to hear more from the ESRI on what to do about the government revenues now... the only thing I can see is lowering the tax rate bands to include more higher rate tax payers or at least freeze them for 2 or 3 years to let inflation catch up.... if government revenues excluding PRSI are €62 billion in 2020 and were approx €50 Billion in 2015 that's increasing approx €2 Billion every year just with inflation, thereby covering the deficit from corporation tax... some mild austerity might be in order


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## kinnjohn (7 Jun 2021)

bunny_ said:


> Google: "ESRI Broad-based tax increases may be needed to fund future public spending"
> 
> A percentage point on the lower tax rate & a percentage point on the upper tax rate would bring in an extra billion according to the ESRI
> 
> I'd love to hear more from the ESRI on what to do about the government revenues now... the only thing I can see is lowering the tax rate bands to include more higher rate tax payers or at least freeze them for 2 or 3 years to let inflation catch up.... if government revenues excluding PRSI are €62 billion in 2020 and were approx €50 Billion in 2015 that's increasing approx €2 Billion every year just with inflation, thereby covering the deficit from corporation tax... some mild austerity might be in order


Between 2015 and 2020 a good bit of the extra 12 billion you posted about came from companies paying more Corporation tax where the government tightened up on  corporation tax loopholes hoping to head off the changes we are now seeing,

The Minister seems to think Corporation tax will be falling not rising once the changes are made even though our rate will be going up to as least 15%,

Do you remember The Irish Economy grows by 26.3 % in 2015 headline,


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## bunny_ (7 Jun 2021)

Google: "Tax Inversions Wikipedia"

There are a good few U.S. companies who are now Irish (because of tax inversions) where we will get 15% of their foreign income if they are bigger than 750 million revenue per year, I think Corporation tax for businesses smaller than 750 million will stay the same 12.5%. It's a pitty from an Irish standpoint that the Pfizer/Allergan deal didn't go through a few years ago, that was worth 150 Billion!

The G20 has to agree to the measures, so it's possible it could go up to 21% like the U.S. & France wanted originally.

As for the economy growing 26.3% that was Intellectual Property being transferred to the Irish Patent Box to lower Corp Tax to 6.25%... I think that's what happened anyway...


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## kinnjohn (7 Jun 2021)

I remember back when the Pfizer/Allergan deal  got called off, people in the know saying the USA would have lost out on tax but Ireland would not have gained any extra tax if the deal went through, It was pressure from Obama that got it called off I think,


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## Purple (8 Jun 2021)

bunny_ said:


> I would like less tax by the way but we have some of the lowest tax to GDP in Europe so we can't complain too much either... Google: tax revenue to gdp ratio


GDP is a nonsense is an almost meaningless figure to use in this country as it is so inflated by the MNC's who are resident in Ireland but carry out very little economic activity here. GNP* is a much better figure to use. 

While this is a wealth grab by countries like France and Germany it's also the case that international tax structures are almost a century out of date and MNC's manage to pay very little tax.


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## joe sod (8 Jun 2021)

Purple said:


> GDP is a nonsense is an almost meaningless figure to use in this country as it is so inflated by the MNC's who are resident in Ireland but carry out very little economic activity here. GNP* is a much better figure to use.


They only came up with GNI* I think it was called after they were ridiculed internationally when GDP rose by a ridiculous amount as described above by   bunny , that's where the "leprauchan economics"  term came from. The whole shenanigans of moving intellectual property from silicon valley to Ireland should never have been allowed , I doubt we benefited much from that intellectually, is an Irish tech or pharma company going to come up the next generation iPhone or covid vaccine?


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## Purple (8 Jun 2021)

joe sod said:


> They only came up with GNI* I think it was called after they were ridiculed internationally when GDP rose by a ridiculous amount as described above by   bunny , that's where the "leprauchan economics"  term came from.


We're not the only country with a massively inflated GDP and GNI has been around for a while but GNI* is an Irish invention which controls for the distortionary effect of Multinationals on our macro economic statistics.


joe sod said:


> The whole shenanigans of moving intellectual property from silicon valley to Ireland should never have been allowed , I doubt we benefited much from that intellectually, is an Irish tech or pharma company going to come up the next generation iPhone or covid vaccine?


We benefit from it massively; we use the taxes we steal from other countries to fund our bloated and grossly inefficient State sector.

If we lose €3.5 billion in taxes the first thing we should try is wasting €3.5 billion less each year. If you don't think that's possible ask yourself if you could save 5% of your household budget each year or, even better, would you spend 5% more than you do now if you could run your house using someone else's money.


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## Zlatanintallagh (8 Jun 2021)

Has anyone ever watched the spider's web? It's a documentary on the UK's 'second empire' and how the city of London, via its crown dependencies like Bermuda, facilitate one third of the world's corporate and private tax avoidance. It's a very good watch.

If Rishi has signed up to this and will bring the crown dependencies along then while it's crap for Ireland, I can see it being good for the world as a whole.

The UAE entered the top ten list of tax avoidance facilitators last year for the first time, which makes me think that some are already preparing for the UK gov to call a halt to the tax free Carribean hideaways.

Will the UAE agree to the global tax minimum? I highly doubt it. Will China, Singapore etc? Again, i highly doubt it.

The G7 can try bring this in but other countries will pop up as tax havens. There'll be other work arounds.


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## kinnjohn (8 Jun 2021)

The G7 can try to bring this in but other Countries will pop up as tax heavens, there will be other workarounds,


I don't think Ireland will be part of the workaround, Our Government already saying We will be  down  2 to 3.5 billion in tax receipts,

It is Pascals job as president of the euro19  Countries to make sure  Ireland do not have a workaround if they reach an agreement on  the changes to Corporation tax ,


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## joe sod (8 Jun 2021)

Zlatanintallagh said:


> If Rishi has signed up to this and will bring the crown dependencies along then while it's crap for Ireland, I can see it being good for the world as a whole.


The focus is on the tech companies though and the gargantuan profits and power they now have, governments don't like that in their eyes the tech companies have moved into their arena and they want to bring them down a notch or two. The fact that Ireland hosts these here means we are really in the firing line now. Also the fact that all the G7 governments want more tax from them and they are mainly US companies we dont have much say really.

The US also has its own tax shelters and Wall street is a much bigger fish than london , I doubt the brits are going to offer up the city of london as a sacrificial lamb unless Joe Biden and others like Switzerland are also offered up. They have the advantage anyway in that they are hosting the G7 so can control the agenda.


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## Sophrosyne (9 Jun 2021)

One of Ireland’s objections was that the proposals were in the form of a competition issue rather than tax law. This allowed majority rather than unanimous acceptance.

If the proposed changes to the corporate tax rate and taxing rights of market countries are to have any meaning, it would have to be through changes to tax laws.


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## kinnjohn (9 Jun 2021)

Irelands objections don't affect the big players  there will still be plenty of tax shelters when this is sorted,
According to Pascal  Ireland  Corporation tax take will to go down by 2 to 3.5 billion, but is this the full story will there be job leakages to the new tax locations,

The point is the Corporation tax take from Companies located in Ireland at present will go through the roof  the few billion we take from them at present  is only a thimble full of what they are going to pay unless they can offset tax  by having a presence where the New extra tax is due,

Will, they stay in Ireland or move to a location where they may be in a position to offset some of the extra tax paid for jobs,


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## Sophrosyne (9 Jun 2021)

The point I was really making is that because this majority agreement was reached on the basis of competition, that is a long way off alignment of tax rules, which could take years.


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## joe sod (9 Jun 2021)

Our GDP is based on the huge presence of the U.S. tech companies located here. If that were to reduce due to the corporation tax changes then our borrowings look unsustainable. Already we have the highest per capita in the EU and it rose faster than any other country during the pandemic. That is all based on inflated GDP figure rather than GNP, how sustainable would our borrowings be if we had to revert to the actual real size of our domestic economy?


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## DublinHead54 (9 Jun 2021)

Is there a tangible risk that we would lose the 'big tech' presence in Ireland? The big tech firms need to maintain a European base (local knowledge, timezones, logistics, target markets etc), a level tax playing field across Europe means less likelihood of them moving to another location. 

I don't think at this stage that they would make their decision solely based on tax to pay.


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## Zenith63 (9 Jun 2021)

Dublinbay12 said:


> I don't think at this stage that they would make their decision solely based on tax to pay.


Combined with the other challenges these companies face here, it may begin to tip the balance out of our favour. Some of those challenges being expensive housing in the city centre, high cost of living, poor public transport, heavy traffic levels, perception that income taxes are high (compared to their US based colleagues), not enough local talent combined with difficulties bringing in talent from non-EU countries to name a few I’m aware of as being a concern.


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## kinnjohn (9 Jun 2021)

Pay would not be an issue up to now because of the low corporation tax they were paying,

In fact, some may have allowed pay to drift up high because of difficulties hiring home-based talent and the need to attract talent from outside Ireland,
With the tax dividend gone Ireland may not be as attractive when recruiting or expanding,
We have seen it already happen in manufacturing Dell just one of many that come to mind, We have seen manufacturing  moving out of Ireland to other EU states for less costly talent and lower cost base,


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## joe sod (9 Jun 2021)

We have a huge welfare state to pay for now only exasperated by the pandemic, still just under 300k still on the pup even though most sectors now opened . The lack of urgency and diligence in ironing out fraud and people not wanting to go back to work is astounding. All this of course paid in part by the corporation tax


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## Zenith63 (9 Jun 2021)

kinnjohn said:


> Pay would not be an issue up to now because of the low corporation tax they were paying,
> 
> In fact, some may have allowed pay to drift up high


I know a few people working in the FAANG companies here, lower pay and higher taxes than in the US are regular grumbles about being based here.

I don’t think we can/should fix either of these though to be clear, just saying they’re on the list of cons. The housing/traffic/transport however is something that has been called out by these companies for years, could have been fixed had we started earlier and would have been for the betterment of everybody in Ireland not just these high-end employees. It’s a real shame.


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## Purple (9 Jun 2021)

Zenith63 said:


> I know a few people working in the FAANG companies here, lower pay and higher taxes than in the US are regular grumbles about being based here.
> 
> I don’t think we can/should fix either of these though to be clear, just saying they’re on the list of cons. The housing/traffic/transport however is something that has been called out by these companies for years, could have been fixed had we started earlier and would have been for the betterment of everybody in Ireland not just these high-end employees. It’s a real shame.


The problem is that we have the wrong conversation about these issues. The bottom line is that the State is very inefficient in delivering services and infrastructure. Therefore we have to tax more to deliver less.


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