Has the prospects of the Organisation for Economic Co-Operation and Development’s (OECD) hopes for a universal 15 per cent corporate tax rate been jeopardised by US President Joe Biden? During his State of the Union address, Biden expressed his desire to raise the US minimum rate from the current 15 per cent to 21 per cent, as a strategy for increasing revenue from large corporations and billionaires.
If this were to occur, it might cause concerns for Ireland, where just recently, a new minimum corporate tax rate of 15 per cent has been implemented, aligning with the OECD’s resolution. Should the US minimum rate surpass this, substantial corporations may end up being obliged to pay a surcharge to the US government.
Is the Irish economy experiencing a downturn?
Biden has long been an advocate for higher corporate taxes. Such an initiative was suggested during his presidency. However, such a motion did not progress as it would have been voted against by Congress. Unless there is an unexpected triumph by Democratic candidates in November, this situation is likely to persist.
Therefore, this might be a more nuanced message. Biden’s team has suggested that should he win, they would strive to renegotiate the global agreement to target a minimum of 21 percent. If Biden is unable to fulfil this in the US, as has been the case with elements of the present OECD agreement, the initiative is likely to falter. This could result in the current OECD agreement not solidifying as a global accord.
Conversely, should Donald Trump triumph, signals suggest that he might withdraw from the agreement, although he has not delineated the alterations he would instigate in the US system. Regardless of who occupies the White House, it’s plausible that tax tensions between the US and Europe could escalate, with Ireland stuck in the precarious position. It’s currently uncertain how significant this situation could be.
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