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How Will the Global Minimum Tax Work in Ireland?

June 1, 2022

Ireland’s Tax Reform

When the OECD’s global tax reform first showed signs of becoming reality back in October 2021, there were a few countries whose attitudes seemed more along the lines of “not so fast” as opposed to “where do I sign?” Ireland was one of those holdouts, as the country feared its enticing 12.5% corporate tax rate would be buried under the 15% global minimum tax, leaving it fewer incentives to lure businesses inside its lush borders.

But what a difference a few months make. These days, Ireland is not only onboard for the global minimum tax plan, but it’s gearing up to implement a domestic minimum tax as part of the deal.

Pillar Two

When a company pays below the 15% global minimum tax in one country, Pillar Two allows other countries to top up the tax to 15%. But countries can also impose a minimum tax inside their own borders, which is known in Ireland as the qualified domestic top-up tax (QDTUT).

Given that Ireland has a corporate tax rate of 12.5%, which is below the 15% minimum, it would be allowed to top up its tax rate to 15% on in-scope entities diminishing the amount other jurisdictions could top up.

Questions and Feedback

How would this work and would it help protect Ireland’s tax revenue collection? That’s what Ireland wants to know and so it’s asking for feedback on the QDTUT. It’s also asking for input on adopting the top-up tax related to minimizing the administrative burden on taxpayers.

Have something to say? The government is taking feedback until July 22.