Ireland will not support new EU levy on corporate profits, says Leo Varadkar

Ireland will not support a proposed European Union levy based on corporate profits that would hit Ireland harder than any other member of the bloc, Taoiseach Leo Varadkar has said.

Speaking on Friday, Varadkar was responding to the proposal laid out by the European Commission which would levy 1.5 per cent of national corporate profits from all EU countries to help repay major Covid-19 related debt across the bloc.

Echoing comments by Finance Minister Michael McGrath to the Business Post two weeks ago, Varadkar said it would be a step too far after Ireland had already agreed to raise its corporation tax rate from 12.5 per cent under the OECD deal.

“We’d be very much opposed to any new measure related to corporate profits,” Varadkar said. “We’ve only just signed up to an EU and international agreement to raise our corporation profit tax to 15 per cent; we’re going to do that in the new year,” he added.

Quoted in the Irish Times, Varadkar said: “I really, really would be very much against any attempt now to bring in another new corporate tax measure on top of that. It wouldn’t be in Ireland’s interests, and it isn’t what we signed up to.”

Also quoted in the same article, Tony Murphy the head of the European Court of Auditors, said Ireland would be harder hit than any other EU member state by the proposal.

This is because the levy would be applied to the percentage of gross national income (GNI) that is made up of corporate profits.

Ireland has voiced “significant concern” at fresh attempts by the EU to “disproportionately” raid our corporate profit revenues.

New proposals, tabled at EU level, are seeking to use corporate profits as a basis to increase Ireland’s contributions to the EU budget by up to €1.5 billion. These proposals have sparked alarm and are being strongly resisted by Dublin, due to the “outsized impact” it would have here because of our large corporate profits base, driven by multinationals.

Speaking to the Business Post, McGrath and Peter Burke, Minister of State for European Affairs, described the proposals as “very concerning”.

In response to the fresh attempts to raid our revenues, the Business Post has learned that the Department of Finance is carrying out an impact assessment to establish the potential fall-out.

McGrath said: “We do have significant concerns about the proposal for an own resource based on company profits.”

McGrath said normal processes around raising revenues for the EU should be followed. “I have already laid out these concerns at the July meeting of EU finance ministers. Our assessment is that the impact on Ireland would be disproportionate and comes at a time when our EU contributions are already growing substantially because of our strong economic performance,” he added.