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New consultation on 15% minimum tax rate

The Minister for Finance Michael McGrath (pictured) has launched a further consultation process on how Ireland plans to implement changes to corporation tax, agreed internationally in 2021.

The ‘Feedback Statement’ launched on Friday (31 March) follows a broader public consultation last year on how the so-called ‘Pillar Two’ rules in the agreement would be implemented.

These rules, as reflected within the EU in the Pillar Two Directive, require member states to introduce a global minimum effective tax rate of 15% for corporate groups with annual global turnover of at least €750 million.

‘Top-up’ tax

This minimum rate will apply in each jurisdiction in which the group operates.

Countries will have scope, however, to implement the agreement in different ways, and Ireland is considering a ‘top-up’ tax, to ensure that relevant companies’ effective rate is brought up to 15% from the headline Irish rate of 12.5%.

According to the Department of Finance, most respondents in the initial consultation asked for further detailed consideration to take place during the development of the relevant legislation, to assist companies in preparing to comply with the new requirements, when implemented.

Administrative requirements

The new Feedback Statement brings forward possible draft legislative approaches to key elements of the rules. It outlines possible approaches that could be taken to a Qualified Domestic Top-up Tax (QDTT), and administrative requirements such as registration, self-assessment, filing of returns, payments, and record-keeping.

Minister McGrath said that he would be bringing forward legislation to deliver Ireland’s implementation of the EU directive in the Finance Bill this autumn.

The consultation period will run to close of business on Monday 8 May. Any queries or requests for clarification can be directed to businesstaxpolicy@finance.gov.ie.