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| Ireland is no longer a tax haven for tech companies |
Ireland has announced that it will enter into an international agreement that provides for a minimum tax of 15% on the profits of multinational corporations.
This is a big change for the European headquarters of many of the major US pharmaceutical and technology companies, including Google, Apple and Facebook.
Ireland's increase from the current 12.5% to 15% may not seem like much on its own. However, the Comprehensive Framework Agreement drafted by the Organization for Economic Cooperation and Development in July is a two-pillar plan designed to help end tax evasion and make international tax regulations more fair and transparent.
The Organization for Economic Co-operation and Development estimates that a 15% tax rate could bring in about $150 billion in taxes worldwide each year, helping to stabilize the international tax system.
Ireland signed the agreement within the framework of the Organization for Economic Co-operation and Development, which was negotiated over many years by 140 countries. The plan forces multinationals to pay taxes in the country where their products or services are sold, even if they are not physically located there.
This requirement applies to multinational companies with sales over 750 million euros (about 867 million dollars). The Irish tax rate of 12.5% continues to apply to companies with sales of less than 750 million euros.
Ireland has been a tax haven for many of the big tech companies over the past few decades. This is due to the lower corporate tax rate.
These companies usually set up a subsidiary for their business in Ireland, agree to their intellectual property and pay the subsidiary a commission for it.
Ireland signs agreement to curb tax evasion
According to the American Chamber of Commerce in Ireland, there are about 800 American companies operating in Ireland. These companies employ about 180 thousand people.
Apple opened its first manufacturing facility in Ireland with 60 employees at its headquarters in Cork in 1980. Although it now has about 6,000 employees.
And Facebook established its international headquarters in Dublin in 2008. Google announced in 2003 that its European headquarters is located in Ireland.
Irish Finance Minister Pascal Donohue said in a statement that the deal solves the financial challenges of digitization. Donohue added that he believes the company's headquarters are still in the country.
"I think our country will still be competitive in the future," Donoghue said. When multinational companies are looking for investment sites, we remain an attractive first-class site. These multinational companies support our economy by operating with high added value. At the same time, we offer multinational companies investing here a stable platform and a good track record.