Apple, the Rest of Big Tech Dealt a Blow as Ireland Joins Global Tax Agreement

Text size

An Intel factory near Dublin. Many large technology companies are based in Ireland.

Miguel Riopa / AFP / Getty Images

Ireland will raise its tax rate for large multinational corporations from the long-held 12.5% ​​to 15% to join the global corporate tax revision effort and potentially the big tech companies using Ireland as a base for international business. to deal a blow.

The tax increase will apply to companies with sales in excess of € 750 million ($ 868 million), which will affect 56 Irish multinational companies with 100,000 employees and 1,500 overseas Irish-based companies with approximately 400,000 employees, the Irish company said Government with. The new rules are expected to come into force in early 2023.

Ireland had been very reluctant to undertake efforts by the Organization for Economic Co-operation and Development (OECD), with its 140 members, to revise global taxes for large companies, and refused to sign an agreement in July.

Read: Tech stocks are vulnerable as the Fed policy change is priced in

Irish Treasury Secretary Paschal Donohoe said the clarity on the tax rate of exactly 15% – as opposed to an effective minimum tax rate of at least 15% as of July – was key in the country’s decision to join the deal.

“In making this decision, the government takes international tax developments into account – the plans for implementation within the European Union and especially in the United States, where a debate is currently underway in the US Congress about changes to its tax system, that the US should follow the results of the OECD – Orientate the agreement, ”said Donohoe.

“This will also be important for the safety of Ireland’s taxpayers, given the significant investments made by US multinationals here.”

Read: Google’s $ 5 billion Android battle could end its dominance

A low corporate tax rate of 12.5% ​​has long been a cornerstone of Ireland’s outbound investment strategy which, along with tax breaks, has helped attract large US companies to set up in the country.

Technology companies such as

alphabet

(GoogL),

Apple

(AAPL),

Facebook

(FB),

Microsoft

(MSFT),

Twitter

(TWTR),

PayPal

(PYPL) and

Intel

(INTC) operate in Ireland.

Write to Jack Denton at jack.denton@dowjones.com