New 15% corporate tax rate unlikely to be reconsidered – US treasury secretary

US Treasury Secretary Janet Yellen has said the new global minimum corporate tax rate of 15% is unlikely to be changed.

Ms Yellen arrived in Dublin for a bilateral meeting with Finance Minister Paschal Donohoe on Monday, to discuss progress on the newly agreed OECD worldwide tax rate.

She denied that Ireland, which had long defended its 12.5% corporate tax rate, had been “cajoled” into signing up to the agreement.

Ireland is understood to have objected successfully to a provision in the deal that would set the tax “at least” at 15%, amid fears it could rise further.

It was a great privilege to welcome @SecYellen to the Department today.

Ireland and the US continue to have a very close relationship with deep cultural and economic ties. pic.twitter.com/x61ls1trii

— Paschal Donohoe (@Paschald) November 1, 2021

Ms Yellen appeared to rule out any further hikes in future.

Speaking from Government Buildings, she said: “I think we have agreed that 15% is the global minimum tax.

“Now, of course, individual countries may choose themselves to establish a higher tax, but I expect many countries to adopt the 15% tax.

“I don’t think that there’s broad agreement on that.

“It works for many countries and I don’t think that that’s something that is going to be reconsidered as a global minimum.”

The European Commission is to develop proposals on implementing the new tax rate in the coming weeks, Minister Donohoe said.

Mr Donohoe, who also serves as president of the Eurogroup of finance ministers, declined to comment on rumours that pillar one of the agreement could fail to pass through the US congress.

But he said efforts at EU level should encourage the US to play its part.

He said: “In order for us to reinforce the efforts that we’re all making, we all know that we need to move together.

“This is why in the coming weeks and months, you will see the commission begin to develop its proposal to do this.

“And we in turn would hope that will enable Secretary Yellen to be able to point to the progress that is happening, and the fact that the friends and partners of the United States of America are playing our part in implementing this change

“We have absolute confidence in the work that is under way now, with respect to this historic change in America

“But this is a global change, in order everybody to have confidence that it’s going to happen, we all need to play our part.”

Ms Yellen also denied that the United States had “cajoled” Ireland into dropping its 12.5% corporate tax rate for the new global minimum of 15%.

She said: “Well, I really personally wouldn’t use the word cajole.

“I think we’ve had very productive meetings in which we have tried to understand the viewpoint of Ireland about these tax negotiations and its needs in terms of being able to sign on to this.

“Also, Minister Donohoe has been terrific in trying to understand the US perspective. I think we’ve had very productive exchange of views over the last several months.”

She added: “Ireland, perhaps once upon a time, the low tax rate was important in attracting countries to Ireland.

“But our strong view is that Ireland has tremendous advantages as a country with an educated workforce and an excellent business environment and that that will continue to serve Ireland’s economic interests.”

I’m delighted to be in Ireland, my first visit here as Treasury Secretary. This is a special visit for me, highlighting the strong bond our two countries share. I thank @Paschald for his warm welcome on my first stop in Dublin, and for a constructive meeting this morning. pic.twitter.com/CYNK0o57L6

— Secretary Janet Yellen (@SecYellen) November 1, 2021

Ms Yellen said the OECD agreement was vital to ensure corporations pay their fair share of tax around the world.

“We’ve had a so called race to the bottom in terms of corporate taxation, and no country has really won that race” she said.

“We’ve all been forced to compete with one another and lower tax rates.

“And the only way to really end that, and to put in a system that promotes all countries interests.

“It’s not some countries against other countries.

“It’s that all of us need to agree that we need to establish at least a minimum level of global taxation, so that corporations here in Ireland and the United States and around the world are bearing their fair share of the tax burden.

“And it’s not all falling on workers or leading to a situation in which we’re unable to invest in our economies and our people.”

It’s a Beautiful Day. pic.twitter.com/m4PI4EOujR

— Secretary Janet Yellen (@SecYellen) November 1, 2021

The agreement is set to cost the Irish exchequer around two billion a year in lost revenue, but Mr Donohoe has insisted the decision is in the country’s long-term economic interest.

He said: “This is about the Government making the choice that it is in our long term economic interest, that we’re in an agreement that stabilises global tax policy, and beings predictability to a topic that has been uncertain and volatile in recent years.

“In that environment, I’m absolutely confident that our country will be competitive, will keep, will retain, will attract jobs.

“But we will do so from a strengthened position of legitimacy inside a global architecture, that is looking to respond back to issues that citizens in Ireland and America and all over the world expect to see change on.”

Ms Yellen also met U2 frontman Bono on her visit to Dublin, tweeting a photo of the two of them with the caption: “It’s a beautiful day.”