We recently shared how 130 countries signed on to a global minimum tax rate proposed by G7 finance ministers. This agreement, establishing a 15 percent minimum corporate tax rate, aims to dismantle tax shelters and reduce tax evasion by increasing accountability, but it will only reach its full potential if well-known tax havens agree to join. Fortunately, the country of Ireland, an infamous tax haven for companies like Google and Facebook, has agreed to join the international agreement.
Ireland, which has had a corporate tax rate of 12.5 percent since 2003, initially rejected the agreement, but last week announced plans to join nearly 140 other countries in committing to corporate tax accountability. “I believe that the upsides of being in such a historic international agreement far outweigh the downsides of staying out,” said Finance Minister Paschal Donohoe.
The agreement has two primary goals: reallocating corporate profits based on where products and services are actually consumed and imposing the 15 percent tax rate on companies with global revenue of 750 million euros ($866 million) or more.
The agreement will be particularly impactful in the US which is home to some of the biggest multinational corporations. In Ireland, the new tax rate will apply to 1,500 foreign-owned companies as well as 56 Ireland-based multinationals.