Ireland’s coffers continue to bulge with tax revenues from multinational corporations, with the Organization for Economic Co-operation and Development (OECD) predicting that the flow of profits and taxes from so-called transnational corporations, or transnational corporations, is likely to continue. are doing.
The OECD notes that investment hubs are generally defined as jurisdictions where total inward direct investment exceeded 150% of GDP on average between 2017 and 2020. These include Singapore, Malta, Liberia, Hong Kong and the Cayman Islands.
“The larger a multinational’s presence in a jurisdiction, the lower its excess profits and therefore the lower its effective tax rate increase.” [ETRs] According to the application of GMT [Global Minimum Tax Rate]” says the OECD report. “This means that, across all income groups, investment locations are the jurisdictions facing the largest increase in ETR.”
The OECD estimates that corporate tax rates could effectively double in these locations.
The new global minimum tax rate of 15% applies to multinational companies with annual revenues of more than €750 million.
Ireland’s long-standing corporate tax rate of 12.5% is believed to be one of the reasons the country is attractive to large global companies, particularly those in the technology and pharmaceutical sectors.
Apple, Google, Microsoft, Amazon, Pfizer, AbbVie and Abbot are major companies with a significant presence in Ireland. Foreign multinational companies operating here not only employ tens of thousands of people but also contribute significantly to the Treasury.
Ireland’s total tax receipts reached a record amount of €88.1 billion in 2023, an increase of 5% on 2022. The increase was mainly due to corporate tax, value added tax, and income tax. Last year corporate tax revenues amounted to 23.8 billion euros, an increase of 1.2 billion euros or 5.3% over 2022.
Last year, the EU Tax Observatory, an organization partly funded by the EU, claimed that Irish-based companies paid an effective corporate tax rate of just 7% in 2020. Just over 58% of corporate tax in Ireland and profits is when companies shift profits to reduce taxes.
A report by the Irish Fiscal Advisory Council last year found that just three companies accounted for a third of all corporation tax collected in Ireland between 2017 and 2021.
According to an OECD report, between 2017 and 2020, the world’s multinational companies generated net profits of $23.7 trillion (€21.6 trillion), reaching an annual average of just under $6 trillion. It says half of the world’s profits are made in high-income regions, from Andorra and Australia to the UK and the US. It added that 18.8% were booked in investment hubs including Ireland.
Of the average annual net income of $5.9 trillion, 12.7% ($753 billion) was taxed less than 5%. An additional 23.4% ($1.4 trillion) was taxed at effective tax rates ranging from 5% to 15%.
“The majority of the profits of large multinational corporations are taxed at rates ranging from 15% to 30%,” the OECD said. “Only $272 billion, or 4.6% of average annual net income, is taxed at rates above 35%.”