I am writing following a number of misrepresentations in the UK media about Ireland and international tax matters. While the Financial Times generally offers fair comment on these issues, the recent article from Chris Giles was somewhat insensitive — in particular, its polemical reference to Ireland (Opinion, June 10).
While narratives around aggressive use of international tax planning make good headlines, such egregious examples do not derive from tax rates but from mismatches in international tax rules — mismatches that have largely been addressed in recent years through the OECD’s base erosion and profit shifting process. Ireland has fully engaged in this process and we diligently reformed our tax code in line with these new international norms.
One part of the current discussions at the OECD relate to the tax challenges of digitalisation and globalisation. Ireland has constructively engaged in finding a solution to these challenges and, while negotiations are still ongoing, we see a pathway to a sustainable and equitable agreement on this issue.
A separate part of the discussions relates to a minimum effective tax rate. This is a sensitive one for Ireland and other small countries for good reasons. Ireland strongly believes in the need for robust boundaries to guard against aggressive tax planning; however, we also believe that any agreement must accommodate healthy and fair tax competition. Ireland’s long-established corporate tax rate of 12.5 per cent is a fair one and is within the ambit of healthy tax competition.
Giles correctly acknowledges that Ireland’s stable and competitive tax rate is just one part of our offering in attracting substantive FDI. Nevertheless, the ability of small countries to fairly use levers such as taxation to compete is an important one — helping to compensate for the advantages of scale, resources and location enjoyed by larger nations.
The Irish government believes it is in everyone’s interest to achieve an ambitious and sustainable agreement on the international tax architecture. While the recent G7 communiqué is an important signpost towards such an agreement, there are an additional 132 countries at the OECD table — with differing perspectives. Ireland will play a constructive role in the discussions over the weeks ahead and we are confident that a comprehensive agreement can be achieved. However, any such agreement needs to meet the needs of countries both large and small, and developing economies as well as developed ones.
Ambassador of Ireland to the UK, Embassy of Ireland, London SW1, UK