[Asia Economy Reporter Kim Suhwan] Ireland, known as a tax haven for multinational corporations in Europe, has announced its intention to participate in the global minimum corporate tax agreement, accelerating the international community's push for a global tax accord. On the 8th, the Organisation for Economic Co-operation and Development (OECD) is expected to announce a comprehensive agreement involving 140 countries.
According to reports from the Wall Street Journal (WSJ) and The New York Times (NYT) on the 7th (local time), Irish authorities have conveyed their willingness to adopt a global minimum corporate tax rate of 15%.
With Ireland Joining, Global Minimum Corporate Tax Becomes Visible... "A Century-Long Reform of the International Tax System"
Previously, the international community has been working to prevent multinational corporations from avoiding taxes by shifting profits to countries with lower tax rates, by introducing a common minimum corporate tax rate across all countries. In June, the Group of Seven (G7) agreed on applying a 15% corporate tax rate uniformly across all countries, aiming for implementation in 2023.
Until now, Ireland has maintained a low corporate tax rate of 12.5% for over 20 years. As a result, numerous multinational corporations such as Google, Facebook, and Apple have established their European and global headquarters in Ireland, transferring profits earned in other countries to their Irish headquarters to reduce taxes. Through this, Ireland has attracted many global companies and achieved economic development.
According to the American Chamber of Commerce in Ireland, currently about 800 American companies operate in Ireland, employing approximately 180,000 people.
Ireland's announcement came ahead of the OECD's meeting on the 8th, where 140 countries are scheduled to participate to reach a comprehensive agreement on the global minimum corporate tax. Analysts suggest that Ireland's participation, after previously strongly opposing the measure, has given momentum to the push for the global minimum corporate tax. Since discussions first began in 2013, the introduction of a global minimum corporate tax has become visible after more than a decade.
According to a draft of the OECD agreement reported by foreign media, multinational corporations with revenues exceeding 20 billion euros (approximately 27 trillion KRW) will be subject to the global minimum corporate tax. Accordingly, Samsung Electronics and SK Hynix are also expected to be affected.
The WSJ stated, "The agreement on the global minimum corporate tax represents a major reform of the international tax system for the first time in 100 years," adding, "If the OECD's comprehensive agreement is reached on the 8th, it will be a very significant advancement." The media also referred to U.S. Treasury Secretary Janet Yellen, who is leading the introduction of the global minimum corporate tax, saying, "Ireland's participation is tantamount to a victory for Secretary Yellen."
U.S. Appears to Have Conceded Some Provisions to Secure Ireland's Participation... Claims That Ireland Yielded
The U.S. side reportedly expressed willingness to revise some provisions of the agreement to encourage Ireland's participation. According to the G7 agreement, the minimum corporate tax was defined as "at least 15%," leaving room for future increases, but this was modified to "15%" to provide flexibility in applying the corporate tax.
Some have claimed that Ireland yielded to international pressure. Kieran McQuinn, a research professor at the Economic and Social Research Institute of Ireland, said, "The tax system reform will have significant ripple effects on the Irish economy," adding, "It appears that Irish authorities moved in response to international pressure."
Meanwhile, countries that have not yet expressed willingness to participate in the global minimum corporate tax include Estonia and Hungary in Europe, as well as Kenya, Nigeria, and Sri Lanka in Africa. Currently, the European Union (EU) is awaiting approval from Hungary and Estonia to endorse the global tax. WSJ reported that Secretary Yellen contacted Estonian authorities the day before to urge their participation in the agreement.
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