Irish low-tax policy

Emmanuel Macron: Irish low-tax policy running out of road

French leader tells Irish counterpart in Dublin that the public wants multinationals to contribute more.

BY SHAWN POGATCHNIK

French President Emmanuel Macron said the circumstances that have allowed Ireland to charge U.S. multinationals a rock-bottom tax rate are changing fast and making the Irish policy obsolete.

During his first visit to Ireland as French leader, Macron insisted his government is not seeking to strongarm the Irish into joining other EU members in accepting OECD-brokered plans for a new global rate of tax on corporate profits of 15 percent. Ireland for decades has levied 12.5 percent, less than half the rates of most EU members.

“I’m not one to put pressure on my friend. We cooperate and we work very well together,” Macron said in English, speaking beside Irish Prime Minister Micheál Martin on the steps of Government Buildings in Dublin.

While Ireland publicly insists its 12.5 percent rate remains sacrosanct, Macron pointed to the Irish government’s current canvassing of opinion on a potential hike as “a very good signal.”

Macron said Ireland’s economic model for decades had utilized low corporate tax to deliver “unique” results.

“But now the situation is quite different. The post-COVID-19 world is new,” he said, arguing that the crisis would pave the way for governments to invest more in the public good and require top corporations to foot more of that bill.

“I want to believe that we will find the right path together, in order to deliver a common framework and to deliver this minimum taxation, because I do believe it makes sense,” Macron said.

He noted that citizens worldwide expect the big tech and pharma firms — most of which have their European operations in Ireland — to pay taxes in a similar fashion to small and medium-sized enterprises (SMEs).

“Our citizens can no more understand that when you are an SME, you pay tax but when you are a big digital group, you don’t pay tax. They want us to change the system,” he said.

Martin, who spoke far less during their joint press conference, confirmed that the two had discussed Ireland’s tax policy and the proposed OECD reforms at length.

He said Ireland maintains “reservations” regarding the OECD proposals.

“There are significant challenges for us in respect of this process,” Martin said. “But we are in no doubt that we will be engaging constructively in the process, and there’s some journey yet to go in that.”

Behind the scenes, Irish officials say they believe other nations are keeping their heads below the parapet but will support exceptions to a flat 15 percent rate on corporate profits when OECD-brokered talks resume in October. Fellow EU members Estonia, Hungary and Cyprus — other locales with low corporate tax rates — publicly share Ireland’s reservations.

Macron and Martin also discussed the ongoing diplomatic struggle with Britain to implement the full set of border controls envisaged in the post-Brexit trade protocol. It requires checks to be conducted on British goods when they arrive from the rest of the U.K. at Northern Irish ports, not when U.K. goods cross the land border with the Republic of Ireland.

Britain has refused to introduce controls on many goods staying within Northern Ireland, an unresolved dispute facing a new set of deadlines at the end of September.

Macron said he fully supports the protocol’s requirement for sanitary and customs controls on incoming goods at Northern Ireland ports. This avoids checks on goods in both directions along the north’s meandering 500-kilometer border with the Republic.

"We'll make sure the agreements signed after lengthy negotiations will be complied with,” Macron said in comments translated from French and directed at Martin. “To put it bluntly, we will never let you down."