Speech to Grant Thornton European Tax Conference

24th October, 2019

Good evening everybody,

I am delighted to be able join you this evening.

I would like to thank Grant Thornton Ireland for inviting me to address this European Tax Conference.

I would also like to extend a warm welcome to Ireland to the many overseas visitors that have travelled to attend this event.

Occasions such as this present a timely opportunity for me to update you on Ireland’s perspective on the significant and fast moving international tax reform work.  

First, I might say a few words on two significant developments this month, our recent Budget and Brexit.

Autumn is always a busy time for any Minister for Finance.

However, this year the challenges in preparing the Budget were exacerbated by the uncertainty surrounding the United Kingdom’s departure from the European Union. 

As I’m sure you all know, the potential effects of a no-deal Brexit on the Irish economy and for Irish businesses would be significant.

That is why we welcome the agreement that has been reached between the EU and UK negotiating teams on a revised Withdrawal Agreement and Political Declaration on the future relationship, and that this has been endorsed unanimously by the European Council.

The revised draft Protocol on Ireland and Northern Ireland provides important safeguards that the Good Friday Agreement will be protected in all its parts, including avoiding a hard border, protecting North South cooperation and the all island economy.

It also protects the integrity of the EU’s Single Market and Customs Union and Ireland’s place in them.

The finalised Agreement also secures a transition period, which is important in giving certainty to citizens and businesses. 

The draft Political Declaration, while different in some areas to the previous draft, still seeks a comprehensive and balanced free trade agreement that will seek to protect key Irish and EU sectors.

There also continues to be important commitments on judicial and police cooperation.

It is clear that considerable work lies ahead and we will continue to work to ensure that our economy and Ireland’s national interests are fully protected.

We welcome then that the House of Commons on Tuesday voted in favour of legislation needed to enact the Withdrawal Agreement.

We note the subsequent developments in Westminster and will continue to monitor this closely.

President Tusk has said that he will now recommend to EU leaders that the British extension request be accepted.

The ratification of this Withdrawal Agreement and endorsement of the Political Declaration will provide much needed certainty and will provide a good basis for constructive negotiations on the future relationship between the EU and the UK.

Indeed it is important to note that the current phase of the Brexit process is just that – a phase, with more to come.

We should not underestimate the challenges of the next phase and its impact on Ireland.

Budget 2020

The central principle of Budget 2020 is to ensure that the Government has the resources at its disposal to meet the challenges of Brexit while maintaining and continuing the significant progress we have made in placing the public finances on a credible and sustainable path.

Our objective is to protect this progress and minimise as much as possible disruption to the economy.

On Budget Day, I announced that I would not commit to across the board tax cuts.

In this time of uncertainty, to do so would risk undermining the hard-won sustainability of our public finances.

I will not allow us to enter a situation where we make decisions now only to reverse them in the future.

Equally, I am clear that there will not be another Budget irrespective of the outcome with Brexit as Budget 2020 has put in place all the arrangements necessary to deal with any contingencies that may arise next year.


While the work of implementing the OECD BEPS recommendations is coming to an end, both in Ireland and around the world, the international tax landscape remains in a state of flux. 

The OECD BEPS Inclusive Framework continues to discuss significant proposals to reform the international tax system.

Ireland is playing its part and is fully engaged in the discussion. Finding agreement will not be easy as we seek to build a global and robust tax architecture that works for all into the future.

Difficult decisions will have to be made, particularly for small open, export orientated countries such as ours but we must engage and make our voice heard.

Make no mistake, change is coming. 

The work underway at the OECD will result in further substantial revisions to the international tax architecture. 

If the work is successful, we will potentially see changes in how highly profitable, highly digitalised companies are taxed. 

If the work does not succeed, we will see a proliferation of unilateral taxes, double taxation and trade disputes.

I continue to believe that global agreement is both achievable and desirable.

The continuation of a stable and consensus-based international tax framework into the future is vital for all countries, but especially for small trading economies.

The certainty and stability that such agreement would bring to the international tax landscape would allow companies to make investment with greater confidence and would facilitate countries fiscal planning supporting economic growth and job creation.

As you will recall, the work at the OECD is being discussed under two Pillars.

Pillar One

Earlier this month the OECD Secretariat published a paper on a proposed ‘Unified Approach’ to the Pillar One proposals on where companies generate their value and whether new concepts of value creation need to be recognised.  As digital technologies change traditional value chains and business models it is only logical that the rules adapt to reflect this changing reality.

While the proposal represents progress on the Pillar One work, many significant questions remain and much detailed technical consideration is still needed if agreement is to be achieved.

A Public Consultation on the proposal will take place in Paris at the end of next month and I would encourage you all to contribute positively to ensure that all issues and interests are heard and considered.

While much remains to be clarified, I see the Unified Approach proposal as a positive step forward. 

I continue to see the potential to find a globally acceptable consensus solution within Pillar One.  

However, to ensure continuity and stability it is important that any move in this direction recognises a number of well-established principles. 

In particular, the existing transfer pricing rules must remain at the heart of the global tax framework. 

The significant and substantial value creating activity that happens in exporting countries like Ireland must continue to be recognised and rewarded.

And finally, any change must be realistic in scope recognising that the consent and acceptance of all countries, large and small, is necessary. 

Within these parameters, I believe we can arrive at a consensus on a long-term solution.

Pillar Two

While work on Pillar Two minimum tax proposals also continues, I remain to be convinced that the issue of addressing the tax challenges of digitalisation requires action in this area.

I am a firm believer that all companies must pay their fair share of tax but any lasting solution to the digitalisation of the economy must not come at the expense of fair and legitimate tax competition.

Competition is a driver of efficiency, and tax competition is particularly important for smaller economies as a means of compensating for scale, geographical location and resource advantages, which larger countries enjoy.

Small countries must be allowed compete by means of fair tax competition, a principle supported by a wealth of economic evidence. 

Ireland was quick to recognise this and our policy of applying a flat rate to a very broad tax base which means that our nominal and effective rates are closely aligned, provides consistency and certainty in an uncertain world. 

Nevertheless, Ireland continues to engage positively in the discussions at OECD, and remains open to solutions which respect our right to compete fairly and which respect the legitimacy of Ireland’s longstanding 12.5% corporate tax rate.

As these discussions continue, my key priority will be to ensure that Ireland’s voice is heard and that our interests are recognised in the eventual globally agreed consensus, which must underpin any sustainable solution.

Impact on Corporation Tax

I believe that the OECD work will be successful at reaching an outcome that provides stability and certainty into the medium term. 

As such, it is important to consider what impact this may have on Ireland, and in particular on our corporation tax receipts.

While certainty and stability will be of significant benefit to Ireland, it is only prudent to recognise that proposals under discussion will see a change in where some of the profits of highly digitalised, consumer facing businesses are taxed.  

As I have said, the expected outcome is a recognition of the value added in marketplaces that companies trade in and a realignment of taxing rights to reflect this. 

This change will come at a cost for small market, export orientated, knowledge economies like Ireland. 

As such, there is a risk to Ireland’s corporation tax receipts.   

While it is too early to quantify any potential cost to Ireland, it is likely that there will be some impact.

Given the significant increase in Corporation Tax receipts in recent years, this Government has recognised and acknowledged the risks in this area.  

This Government will continue to broaden the tax base and prioritise the reduction of debt to enhance our fiscal capacity to deal with this type of external shock.

This is also why I have published a paper on Fiscal Vulnerabilities on Budget Day.

In recent years, we have seen a ‘level-shift’ in corporation tax receipts with a high degree of concentration coming from a small number of firms.

The paper models a number of scenarios to assess the impact of a sharp reduction in corporation tax receipts on the public finances, and outlines a number of proposals to mitigate risks to corporation tax revenues.

I will give consideration to these, and possibly other proposals with a view to making a recommendation to Government on how to proceed.

Equally, we will deliver a budget surplus this year and seek to improve on this next year. For the future, it is my intention to continue to improve the surplus on an ongoing basis.

My officials will continue to monitor developments as part of a policy of prudent risk management. Our expectation is that whatever emerges from the current OECD discussions must be moderate in nature if consensus is to be achieved.

Nevertheless, we must recognise that structural changes such as those being discussed at OECD have the potential to have a significant impact in the coming years.


In conclusion, I believe that it is important that we recognise that change is necessary and that it is inevitable.

Although there will be benefits arising from the increased certainty any OECD agreement brings, the proposals also pose challenges and risks for Ireland.

However, the prize is a global tax framework that is fair, sustainable, and continues to provide a global platform for economic prosperity for everyone and not just the privileged few.  

I think that is a prize worth fighting for. 

I hope you all enjoy this evening’s event.

Thank you