Ireland told it can keep 12.5% corporate tax rate for smaller firms

Ireland has received assurances that if it agrees to a new global minimum corporate tax rate of 15% it can maintain its 12.5% rate for firms with annual turnover below 750 million euros ($867 million), Deputy Prime Minister Leo Varadkar said.

Irish ministers are due to meet on Thursday to decide on whether to sign up to an Organisation for Economic Co-operation and Development-brokered (OECD) overhaul of how multinationals are taxed.

As it stands, the deal that would mean that Dublin could no longer offer its prized 12.5% rate to blue chip companies including Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB), whose European headquarters are based in Ireland.

Ireland declined to sign up to the initial global deal in July that all bar a handful of the 140 countries involved agreed to.

The government has sought in talks with the OECD and the European Commission to retain the ability to charge the lower 12.5% rate to small and medium sized companies.

“The minister (for finance) informed me today that we have received that assurance and we can do that,” Varadkar told parliament on Thursday.

An updated draft text this week dropped “at least” from the reference to a proposed minimum global corporate tax rate of 15%, clearing a major hurdle for Ireland, which said that caveat would undermine the certainty its tax code has offered multinationals for years.

Ministers have said they are confident the cabinet will agree to join the deal.

Approval from Ireland, one of the countries that has benefited most from low corporate taxes, would be a big boost for the project to impose a minimum global rate.

The handful of holdouts, which also include fellow EU members Estonia and Hungary, cannot however block the proposed changes.

($1 = 0.8649 euros)