Changes to corporate tax rules will reduce revenue by up to €2bn
The Minister for Finance, Paschal Donohoe, has said planned changes to corporate tax rules will result in a reduction in corporate tax in the future of between €800m and €2 billion a year.
This reduction is expected to take a number of years.
He said that the plan Ireland is launching today should help it navigate its way through the future challenges.
Minister Donohoe said the kind of change that could happen will depend on what rules are agreed on this tax in the future.
He defended the use of revenue from these taxes in day to day spending, saying it was used in line with or below the rate at which the economy was grown, while excess money was used in the building of homes and public transport and health.
He said the link between corporate tax rates and day to day spending is not as strong as it was in the past.
Mr Donohoe said that the money was not used to reduce or significantly change other ways that the State saves money.
When the economy was growing well, he said, the government was very careful about changes made to its tax base.
The Department of Finance has published a range of changes to how company profits will be taxed.
The Minister also said he was committed to retaining Ireland’s 12.5% corporation tax rate.
He said Ireland was also committed to the ongoing process of reform at OECD level.
The incoming Biden Administration in the US is expected to have more engagement with the OECD but Mr Donohoe also credited the outgoing Trump Administration with having “more engagement than you might think.”
The OECD corporate tax reform process has been stalled since June when the US suspended its engagement.
Last year the Exchequer collected €11.8 billion in corporate tax. This made up 20% of tax revenue.