LONDON – Ireland, a European home like technology giants Apple i Google, is trying to reach a compromise on global taxation that recognizes “the role of legitimate tax competition,” the state finance minister told CNBC on Friday.
Ireland is known for offering a low income tax rate, 12.5%, and a recent agreement between the seven most advanced economies that could potentially cause this.
G-7 finance ministers agreed this month that this should be done minimum global income tax rate of 15%, as suggested by the Biden administration, as they try to address calls for a fairer tax system.
“What we are going to do is get intensively involved in the OECD process over the coming weeks and months and I hope an agreement will be reached that recognizes the role of legitimate tax competition for small and medium-sized economies,” Paschal Donohoe told Irish CNBC.
The G-7 plan is being discussed at the OECD level, and will be discussed by G-20 leaders. The idea is to get as many countries as possible to support the G-7 proposal, so that there are better chances for its implementation.
“We still have time before a final agreement is reached, so it’s hard for me to say what that compromise might still look like. But I believe it’s in everyone’s interest to find a compromise,” Donohoe told CNBC’s Annette Weisbach.
The European Commission in 2016 decided that Apple had received illegal tax breaks in Ireland and ordered Dublin to recoup 13 billion euros ($ 15.49 billion) from the technology giant. Both Ireland and Apple have challenged the decision the case is now being assessed by the highest European court.
Taxation became especially important after the pandemic, as many countries are desperate for new or stronger sources of income to be able to repay the debt incurred during the crisis.
The European Union raised 20 billion euros earlier this week through a ten-year bond sale under a broader 800 billion-euro stimulus plan. This is the first time that the European Commission has eavesdropped on markets on behalf of the 27 EU countries and proved to be attractive among investors, given that it has subscribed over seven times.
“In short, I expect the first payments to happen in the second half of July,” EU Budget Commissioner Johannes Hahn told CNBC on Thursday about when money borrowed from the market will start arriving in individual EU countries.
Ahead of the first payments, the commission has already approved some recovery plans – documents in which countries have indicated how they will use the funds. This is the case in Portugal, Spain, Greece, Denmark and Luxembourg. More approval is expected in the coming days.
“There has been some criticism that we have run the program too slowly in Europe, but in fact it is because the European Commission and all of us as Member States want the money to be used for the right purposes,” Pierre Gramegna, Luxembourg’s finance minister, told CNBC in Friday.