By G9ija

Paschal Donohoe (Alberto Pezzali/PA)

Finance Minister Paschal Donohoe has refused to speculate on whether Ireland will sign up to a global minimum corporate tax rate of 15%.

The minister has warned of a two billion euro hit to corporate tax revenues in the short to medium term, amid the international reforms.

Mr Donohoe has vowed to defend Ireland’s 12.5% corporation tax, but said he would not speculate “on what my final position could be”, with negotiations ongoing.

Ireland is one of only five nations not to sign up to the major OECD agreement, which is backed by more than 130 countries worldwide, as well as the EU.I’m not going to speculate on what my final position could be in relation to an agreement that isn’t yet finalised 

Speaking to the Budgetary Oversight Committee on the summer economic statement on Thursday, Mr Donohoe insisted he is committed to defending the 12.5% rate.

He said: “I’m involved in a negotiation at the moment. And I’ve proven my commitment to standing by our rate, by virtue of the fact that we’re not in an agreement at the moment and in a minority of countries not in that agreement.

“I’m not going to speculate on what my final position could be in relation to an agreement that isn’t yet finalised, but my commitment to our rate is proven by where we are at the moment.

“What I’m doing at the moment attests my commitment to protecting and standing by our rate, and I’m not going to speculate in a negotiation on where things could be later in the year.

“I can commit to putting in place a very robust and very strong defence for what I’m doing. And I have proven that by my actions at the moment.”

Sinn Fein TD Pearse Doherty accused the minister of “conditioning” the public for a climbdown on the corporate tax rate.

He said: “Minister, others will look at what you’ve said, and more importantly, what you haven’t said.

Sinn Fein finance spokesman Pearse Doherty has accused the Finance Minister of ‘conditioning’ the public for a climbdown on the corporate tax rate (Niall Carson/PA)

Sinn Fein finance spokesman Pearse Doherty has accused the Finance Minister of ‘conditioning’ the public for a climbdown on the corporate tax rate (Niall Carson/PA)

“What successive finance ministers were willing to say, which is that you will not increase the 12.5% tax rate.

“Three months out from the conclusion of these negotiations, the fact that you’re not willing to say that, some will argue, maybe you’re in the process of conditioning the Irish people to be the first finance minister in more than a decade who is actually going to increase our corporation tax rate.”

Mr Doherty said this was “as a result of negotiations that aren’t going Ireland’s way, in terms of our interests”.

Mr Donohoe replied: “I want to remind Deputy Doherty that I am engaged in a negotiation and to make clear that my commitment to securing our rate and protecting it in our tax code is attested by my unwillingness to sign up to a consensus that is there at the moment.”

He warned that the reforms could impact Ireland’s balance sheet to the tune of two billion euro.

Mr Donohoe said: “While corporation tax has helped to ‘plug the gap’ in many areas of public policy in recent years, there is a very real possibility that this revenue stream will soon begin to decline.

“Further agreement is needed within the OECD framework. However, international corporate tax reform, when finalised, could reduce Ireland’s relative advantage in this area.

“While the potential revenue loss depends on many factors, my department’s estimate is that corporation tax could be impacted by up to two billion euro annually over the short to medium term.”