Ireland will raise its tax rate for large multinationals from the long-held 12.5% to 15%, joining a global effort to overhaul corporate taxes and potentially dealing a blow to the Big Tech companies that use Ireland as a base of international operations.
The tax increase will apply to companies with revenue in excess of €750 million ($868 million), impacting 56 Irish multinationals employing 100,000 people and 1,500 foreign companies based in Ireland with some 400,000 workers, the Irish government said. The new rules should take effect in early 2023.
Ireland had been a major holdout in the effort by the 140-member Organization for Economic Cooperation and Development (OECD) to overhaul global taxes for large corporations, refusing to sign on to an agreement in July.
Irish minister for finance Paschal Donohoe said clarity over the tax rate being exactly 15%—opposed to a minimum effective tax rate of at least 15%, from July—was the key factor in the country’s decision to join the agreement.
“In making this decision, the Government is taking due regard of tax developments internationally—the plans for implementation within the European Union and also notably in the United States where a debate is currently under way in the U.S. Congress on changes to their tax system so that the U.S. is aligned with the outcome of the OECD agreement,” Donohoe said.
“This will also be important for taxpayer certainty in Ireland given the significant investment by U.S. multinationals here.”
A low corporate tax rate of 12.5% has long been a pillar of Ireland’s foreign investment strategy, which, along with tax breaks, has helped lure large U.S. companies to establish a base of operations in the country.
Tech companies such as
(INTC) have operations in Ireland.
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