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There have been many indications that the G7 Group could reach a new agreement, over global tax and multinationals.

An accord is also likely to be set, with obvious effect for Ireland. The prosperity of the State over the last three decades is directly associated with jobs created by multinationals, as well as the billions in corporation tax that large foreign corporates pay to the exchequer.

The G7 Group of the world’s greatest economies and the Organisation for Cooperation and Development (OECD) are attending meetings next week to reach an agreement that could see a 15 per cent rate for countries to tax multinationals.

Not only this, but a virtual meeting has also taken place recently between the G7 countries that discussed global economic recovery after Covid-19 and climate change.

What impact could this have on Ireland?

This could have a profound impact on Ireland as much of the State’s wealth over the last three decades, is due to hundreds of thousands of jobs created by multinationals and the great amount paid in corporation tax. These are from the large foreign corporates such as Apple and Google, who pay the exchequer.

In 2015, the exchequer’s corporation tax receipts were at €6.9 billion and have now increased dramatically to a total of €11.8 billion. This accounts for 20 per cent of all tax receipts collected by the State.

In a report by the Irish Fiscal Advisory Council (IFAC) this week, it revealed that the Government said that €2 billion and as much as €4 billion a year, could be lost under global tax reforms. IFAC also warned that just five firms abandoning Ireland could total to a €3 billion loss in corporation tax receipts.

Not only this, but a group of only 10 multinationals accounted for 56 per cent of the €11.8 billion collected in corporation tax receipts last year.

With a G7 meeting between finance officials in London commencing next week as well, an agreement must be set to incentivise the rest of the world into altering how much tax multinationals should pay and where, French minister Bruno Le Maire added today.

Since tax legislation is constantly changing, we at McMahon & Co. recognise the importance of considering the implications of all taxes on your circumstances and not just a particular tax you may want to review.

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