Finance minister Michael McGrath said a top-up tax of 2.5% will be applied to companies with a turnover of €750m.
Corporation tax on large multinational companies is to increase to 15% from the beginning of next year, the Finance Minister has confirmed.
Michael McGrath has said a top-up tax of 2.5% will be applied to companies with a turnover of €750m or more to bring Ireland in line with other countries.
Mr McGrath is bringing a memo to Cabinet this week with details of a new Qualified Domestic Minimum Top-Up Tax which will bring the rate of corporation tax to 15% for large multinational firms.
However, smaller businesses will not have to pay the additional levy and will continue to be taxed at the lower rate of 12.5%.
“It’s a very detailed complex piece of work. We published indicative aspects of the legislation that will be required so it is going to be a very complex autumn Finance Bill to underpin what is the historic change in relation to our corporate tax,” Mr McGrath said.
“That will take effect from January 1 of next year. It will be legislated for in the autumn Finance Bill.”
Under an international agreement that was signed up to by around 130 countries including Ireland, multinationals will also be required to reallocate a portion of their profits to the jurisdiction where their customers are based.
This is likely to have a greater impact on Ireland than other countries.
Mr McGrath said discussions are still ongoing about this element of the deal, but he admitted that the reallocation of taxing rights will result in “a negative impact in Ireland because of the small size relatively of the domestic market here in Ireland”.
“It is still subject to having very detailed discussions and negotiations at OECD level. Ireland is at the table. We are very much involved in helping to shape the nature of those discussions and indeed the direction of the emerging conclusions,” the Minister told RTÉ radio.
“In time, it does remain our assessment that there will be an impact on receipts in Ireland.”
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