Ireland could feel pinch from global tax reform

The Republic of Ireland's economy could be in line for a major shock, leading to possible tax rises as a result of the new minimum global corporation tax rules that United States President Joe Biden is championing.

Biden has made great play of his ancestral roots in County Mayo in the west of the country, but many politicians and economists in Ireland have made it clear that the economy could suffer as a result of what is being suggested.

Biden's proposed minimum rate of 15 percent would erase the attractiveness of Ireland's 12.5 percent rate, which has lured many overseas investors, including several major technology companies, among them Apple, Facebook and Google. Under the new plan, they would still have to top up their tax bills back at home.

"A minimum 15 percent tax rate is grand for countries who already charge much higher corporation tax rates," Irish Parliament member Neale Richmond, of the Fine Gael party, was quoted as saying by the Daily Telegraph.

"But if that is going to become the global norm, you have to take into account smaller economies and the challenges they face, and also ensure that countries are actually properly applying theirs - that's something that we've always been discussing internally with the European Union as well.

"We just don't have an economy of the scale of somewhere like France and Germany, so we always have to work slightly differently. We are very alive to it; any possible change would have an impact."

In an interview with Irish state broadcaster RTE in April, the country's finance minister, Pascal Donohoe, warned that the proposed tax changes were coming, and that they would "have consequences".

"It could have a very meaningful effect, and significant effect, on how we conduct corporate tax policy in Ireland," he said. "It has the potential to have a very big impact on where tax is collected."

When the Biden proposal was revealed, Donohoe told Sky News he had "really significant reservations" about it.

The new rules, he said, would mean "only certain countries and certain-size economies can benefit from that base - we have a really significant concern about that".

The Irish Times newspaper reports that Donohoe will have talks with US Treasury Secretary Janet Yellen this weekend, when Biden is attending the G7 leaders' summit in England, at the start of his first overseas trip since taking over as president.

Last year, a record corporation tax bill of 11.8 billion euros ($14.3 billion) accounted for 12 percent of the Irish government's entire revenue, a significant rise from 2013's figure of around 4 billion euros.