Windsor Framework & Northern Ireland Protocol Overview
OECD's BEPS process may impact FDI offering
Pillar Two due for EU implementation in 2024, Pillar One - number of open issues
Pillar One: proposal to re-allocate taxing rights on non-
routine profits
▸ The first pillar seeks to address taxing rights. It reallocates
25% of MNE's excess profit* from jurisdictions where
companies reside to the markets where user/consumers
are based.
▸ This is to keep pace with digitalisation of the economy
where sales can take place without taxable presence in
market jurisdiction.
Pillar 1 will reduce Ireland's corporation tax base. Some
estimates place the hit at c. €2bn per annum by 2026.
▸ Ireland has always been fully supportive of Pillar One
despite the implied cost to the Exchequer.
▸ Near final text of rules published, US holding public
consultation. Open for signature in early 2024, ratification
could take longer
Gníomhaireacht Bainistíochta an Chisteáin Náisiúnta
National Treasury Management Agency
Pillar Two: 15% minimum effective global tax rate
▸ Countries will introduce a minimum effective tax rate with
the aim of reducing incentives to shift profits.
▸ Where income is not taxed to the minimum level, there
will be a 'top-up' to achieve the minimum rate of tax.
▸ The EU have agreed a directive to implement the 15% rate
in 2024. The impact on tax will not be seen until 2026
however.
▸ Ireland's rate will remain one of the lowest in EU and will
continue to be competitive. The R&D tax credit enhanced
in Budget 2024 to maintain net benefit for businesses.
▸ Ireland can lean on other positives; educated and young
workforce, English speaking, EU access, and ease of doing
business.
* Excess profit is defined as group profit in excess of 10% of its revenue
23
23View entire presentation