The imposition of a flat tax on IT companies will not force tech giants to leave Ireland

The imposition of a flat tax on IT companies will not force tech giants to leave Ireland

A few days ago, the G7 countries supported the US proposal to impose a flat tax of at least 15% on multinational IT companies. While the proposed rate would increase the tax currently in effect in Ireland and some other countries, tech companies are unlikely to be willing to move to other regions for a variety of reasons.

Image: Bloomberg

Although the rate suggested by G7 members at 15% is higher than the 12.5% ​​rate in Ireland, it is still lower than in the US or France, where companies are required to pay 20% tax. In addition, Ireland has several tax treaties with other countries that reduce the tax rates of multinational companies as well as give companies the right to receive benefits to compensate for research and development costs. If the new G7 law does not affect the elimination of these benefits, countries like Ireland will retain many of the benefits that IT companies can continue to enjoy.

Some companies may relocate their headquarters to lower tax countries such as Ireland. However, there are still many incentives not to do so. Still Robert Palmer (Robert Palmer), executive director of Tax Justice UK law firm, shares this view. He also spoke positively about the G7’s initiative to impose a single tax, saying it would end the race between countries that want to set the conditions most favorable to large companies.

Ireland has become the European headquarters of several large international companies, including Google, Apple and Facebook. The G7 proposal for a tax is aimed at preventing companies from using the lower tax jurisdiction to reduce tax payments. In addition, the move will help end the race, in which countries offer more favorable terms and lower taxes to IT giants. It should be noted that the G7’s initiative to introduce flat taxes was supported by representatives of some of the largest technology companies.

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