Bowing to international pressure, Ireland is joining the international agreement to reform tax rules. It means that a minimum effective corporation tax rate of 15% for multinationals with revenues in excess of €750m will now apply in Ireland.
No change will be made to the longstanding 12.5% rate for businesses with revenues below €750m.
The OECD-brokered agreement is aimed primarily at levelling the tax inequalities arising from the digitalisation of the global economy. Many social media giants have their European headquarters in Dublin, including Facebook, Google, Yahoo, LinkedIn and TikTok.
Altogether, the 15% rate will apply to 56 Irish multinationals employing about 100,000 people, and 1,500 foreign-owned multinationals based in Ireland that employ about 400,000 people.
If Ireland had kept its lower 12.5% rate, multinationals booking profits there would have to pay the additional tax elsewhere under the proposals.
Ireland has become an attractive home for insurance and reinsurance businesses, especially since Brexit, as it offers access to the EU. Also in its favour is English as the international language, an educated workforce and its GMT timezone.