G7 COUNTRIES THAT make up lucrative markets for US tech giants have moved closer to a plan to get more tax money from companies like Amazon, Apple, Facebook and Google.
The group, including the UK, Canada, France, Germany, Italy, Japan and the United States, has visions of a global tax rate of at least 15% on the multinational behemoths.
Finance Minister Paschal Donohoe was among the world leaders who attended the G7 summit of finance ministers in London last week – as Ireland’s multinational tax practices featured on international front pages.
Donohoe said last weekend that Ireland could lose up to one fifth of its corporate tax revenue each year – some €2.2 billion – if the 15% rate was put in place.
Speaking on RTÉ radio’s Morning Ireland today, Donohoe said he wanted to maintain Ireland’s 12.5% corporation tax to “maintain and grow” employment and to have continued investment in the economy.
He said that within the OECD, an economic organisation involving dozens of countries, “Ireland will be vigorously making the case for legitimate tax competition and for a rate of 12.5%”.
He said this has “always been a very contested area within the European Union” but said other countries have not yet put up their corporation tax rates.
“Let’s see what happens with the rest of the world,” Donohoe said, adding that there is an “awful lot to play out yet”.
Amidst the process that is ahead, and the negotiation that is yet to come, I am very confident that Ireland will continue to be a really attractive place to either grow a business in, set a business up, or to invest in.
US President Joe Biden is pressing to raise the corporate tax rate, taking particular aim at companies reaping fortunes.
Silicon Valley giants are increasingly under fire in Europe and the United States due to concerns about wielding monopoly-like power.
Nations out to optimise tax revenue from tech firms face powerful companies adept at using data, analytics and ingenuity to build markets and profits.
Part of the G7 reform plan involves taxing multinational corporations where they make their money rather than where they have offices or factories.
In Europe, such a tax code change would be felt in Ireland, which has attracted companies such as Apple with the 12.5% corporation tax rate.
It remains unclear whether the G7 will achieve its goal.
Questions to be answered included whether countries could entice companies with deductions or breaks, and what portions of profits should be taxed.
Nuances of a global tax would have to be negotiated by those involved, with everyone figuring out how to apply the rules fairly.
Authorities will also need to craft a code that targets large tech firms while avoiding penalizing small or unrelated firms.
Seattle-based Amazon, for example, has been keen to distinguish itself from Silicon Valley firms by playing up its e-commerce core, complete with warehouses and a relatively lean profit margin of six percent.
The profile changes significantly once Amazon Web Services, its lucrative cloud computing division, is factored into the equation.
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Facebook said yesterday it will give employees the option of sticking with remote work
for the long term, even offering to help some interested in moving to other countries.
Beginning on 15 June, Facebook will let any employee whose job can be done remotely ask to work that way permanently, the internet giant told AFP.
To be resident in Ireland for tax purposes, you must be in the country for at least 183 days of the tax year or at least 280 days over the past two tax years, with at least 30 days in each.
Minister Paschal Donohoe reminded on RTÉ radio this morning that “companies and workers who want to avail of that tax residency need to meet those requirements”.
Additional reporting by AFP.