Ireland has always been a tax haven for tech giants and big firms all across Europe. With almost every major firm having their European headquarters in the state of tax blessing, the people have always wished for a share by hosting these firms and the 12.5% taxing rate that had been implemented previously was not cutting the people and the state any slack. As a result, to reclaim some revenue and earnings, Ireland decided a few days ago to become an official party of an internationally binding agreement that pushes the rate for multinational companies up to 15%.
This may not seem much in terms of the eyes of a normal company but for multi million and billion dollar firms, a 2.5% equates to several million in terms of their revenue. Although it was expected and hoped that the decision would come in sooner but after these firms have successfully tackled the discrepancies of COVID-19, it seems better to introduce it as early as possible to allow these firms to operate in a much more budgeted way with the new taxing system in Ireland.
This was the result of the Organization for Economic Cooperation and Development (OECD) outlining its two tier program aimed at tax transparency across the globe and putting out an equal line across all countries to prevent multinational firms and companies to garner unfair advantage and evade taxes by going for a lower taxing country.
However, this plan that is being talked about with over 100 countries is not set in stone yet with there being room for change. Amongst that, the plan has a safety net for companies with a revenue of fewer than 750 million Euros. The plan states that any company that has the revenue lower than the amount mentioned will be taxed with the amount that is already established in the country, for Ireland i.e 12.5%, however, any company or firm that exceeds 750 million Euros in earnings would be directed to settle to a 15% tax on their revenue according to the deals.
To put the value of Ireland and the tax increase in perspective, over 800 US companies have their branches in the Ireland with over 180000 employees working under these companies. These companies include everyone from up and coming tech firms to the already established tech giants that put their mark back in the day with Apple in 1980, Google in 2003, and Facebook in 2008.
However, as highlighted under the OECD provision, that reign is soon to end as from 2023 the new tax rate would take effect in Ireland with consequences that we know nothing yet about but can only speculate and keep updated with.
Photo:: JUSTIN TALLIS / AFP via Getty Images
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This may not seem much in terms of the eyes of a normal company but for multi million and billion dollar firms, a 2.5% equates to several million in terms of their revenue. Although it was expected and hoped that the decision would come in sooner but after these firms have successfully tackled the discrepancies of COVID-19, it seems better to introduce it as early as possible to allow these firms to operate in a much more budgeted way with the new taxing system in Ireland.
This was the result of the Organization for Economic Cooperation and Development (OECD) outlining its two tier program aimed at tax transparency across the globe and putting out an equal line across all countries to prevent multinational firms and companies to garner unfair advantage and evade taxes by going for a lower taxing country.
However, this plan that is being talked about with over 100 countries is not set in stone yet with there being room for change. Amongst that, the plan has a safety net for companies with a revenue of fewer than 750 million Euros. The plan states that any company that has the revenue lower than the amount mentioned will be taxed with the amount that is already established in the country, for Ireland i.e 12.5%, however, any company or firm that exceeds 750 million Euros in earnings would be directed to settle to a 15% tax on their revenue according to the deals.
To put the value of Ireland and the tax increase in perspective, over 800 US companies have their branches in the Ireland with over 180000 employees working under these companies. These companies include everyone from up and coming tech firms to the already established tech giants that put their mark back in the day with Apple in 1980, Google in 2003, and Facebook in 2008.
However, as highlighted under the OECD provision, that reign is soon to end as from 2023 the new tax rate would take effect in Ireland with consequences that we know nothing yet about but can only speculate and keep updated with.
Read next: Facebook Highlights the Need for Diversity in Advertising in New Report