The Finance Minister has been accused of failing to back claims made by Leo Varadkar this week that any increase in corporation tax would only impact companies earning more than $750 million, or €640 million, per year.
Appearing at an Oireachtas committee on Thursday, Paschal Donohoe was asked by Sinn Féin representatives whether he backed the Tánaiste’s suggestion that any change to Ireland’s 12.5 per cent corporation tax “won’t impact the average Irish business”.
Mr Varadkar made the comments earlier this week, amid speculation on whether Ireland will sign up to the Organisation for Economic Co-operation and Development (OECD) proposed reform of global tax rules, already agreed by 130 countries.
Government members have insisted in recent days that talks are ongoing.
Mr Varadlar told reporters: “Any agreement that we may or may not come to won’t impact the average Irish business.
“It won’t impact even large businesses or mid-caps, the 12.5 per cent rate will stay in place for them.
“Any change — if there is any change, we’re not committing either way — would only apply to those very large companies.”
Sinn Féin TD Mairead Farrell asked Mr Donohoe if the European Commission would allow Ireland, in the event it signed up to the OECD agreement, to run two different corporate tax rates simultaneously.
“Our ability to do that will be dependent on the final decision we make in relation to the OECD process,” Mr Donohoe said.
Asked later by Sinn Féin’s Pearse Doherty if Mr Varadkar’s remarks were “accurate”, the finance minister said: “What the Tánaiste is doing is referring to the current OECD agreement, and he is correct in making that reference.”
Mr Doherty asked if the European Commission had approved such an approach to corporation tax.
“That’s an important question of detail that I will be, and want to, answer if we make a decision to enter into the OECD agreement,” Mr Donohoe said.
He said he was engaging with the European Commission “on this and other matters”.
Mr Doherty, in a back-and-forth with the finance minister, accused Mr Varadkar of providing a false certainty to businesses.
“Can you give that same certainty here today at this committee? Because I think uncertainty in this situation is not good,” he said.
“The Tánaiste was completely correct in what he said, and I will be able to outline how that will be implemented, if I make a decision to recommend that Ireland enter into the agreement,” Mr Donohoe replied.
During the committee appearance, Mr Donohoe also said that any decision on corporation tax made by the Irish Government will “carry with it significant consequences”.
The finance minister also suggested that one of the advantages of being part of the OECD agreement would be the ability to shape global tax policy into the future.
Mr Donohoe told the committee: “I know the OECD process, as critical as it is, is just part of the process in which corporate tax change will take place in Europe.”
