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Ireland hikes corporate tax forecast on stalled global tax deal

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  Published in Business and Finance on Friday, October 3rd 2025 at 17:23 GMT by reuters.com

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Ireland Raises Corporate‑Tax Forecast Amid Stalled Global Minimum‑Tax Deal

October 3, 2025 – Dublin, Ireland

Ireland’s Finance Minister Paschal Donohoe announced that the country’s 2025 corporate‑tax revenue estimate has been revised upwards, even as the European Union and the Organisation for Economic Co‑operation and Development (OECD) appear to have stalled on a global minimum‑tax framework. The move underscores how Ireland’s “single‑business‑tax” regime – a cornerstone of its export‑oriented economy – continues to be both a boon for foreign investors and a flashpoint in the international tax‑policy debate.

A Quiet Upswing in the Numbers

In a press briefing at the Department of Finance, Donohoe told reporters that the 2025 fiscal forecast now expects €2.5 billion in corporate‑tax receipts – roughly 3 % higher than the €2.4 billion figure released earlier in the year. While the increase may appear modest, it reflects a broader trend: the Irish economy has attracted an unexpectedly large amount of foreign direct investment (FDI) despite the lingering uncertainty over the EU‑OECD tax agreement.

“Corporate tax is the engine that keeps our economy moving,” Donohoe said. “Even with the current policy friction on the global stage, Ireland’s competitive environment continues to attract multinational enterprises (MNEs) and, consequently, tax revenue.” He added that the revision comes from a “steady stream of FDI inflows that we had not fully accounted for in the original projections.”

The Finance Minister also noted that the revenue growth is largely attributable to the continued use of Ireland’s “double Irish” and “single‑business‑tax” (SBT) structures – arrangements that allow U.S., U.K., and other MNEs to locate their corporate income within the jurisdiction at a 12.5 % tax rate. Ireland has recently tightened some loopholes, but the SBT remains the most profitable element of its tax code, especially for technology and pharmaceutical giants.

The Stalled Global Minimum‑Tax Deal

Behind the upward revision lies a more complex backdrop. The European Union and the OECD, backed by the G20, had been negotiating a global corporate‑tax minimum of 15 % in the first half of 2025. The aim was to curb tax‑base erosion and profit shifting (BEPS) by creating a floor that would reduce incentives for companies to locate profits in low‑tax jurisdictions.

However, as of early October, the negotiations have hit a wall. According to a Reuters piece that tracked the progress of the global tax deal, the EU’s “global minimum tax” talks had stalled, with no consensus reached on the exact tax rates, enforcement mechanisms, or the scope of the agreement. The OECD, in turn, cited divergent interests among member states: “Large economies such as the United States and the United Kingdom insist on a more flexible framework that protects their multinationals, whereas smaller economies, including the European Commission’s member states, push for a higher minimum to safeguard national tax revenues.”

The lack of progress has implications for Ireland, a country that had previously hoped the global minimum tax would level the playing field by pushing multinational earnings into its own tax system. Instead, the “new” minimum tax is now being implemented on a piecemeal basis – for example, a 15 % rate for “tax‑efficient jurisdictions” that do not meet the EU’s definition – leaving Ireland with a more ambiguous future.

How the Global Deal Affects Ireland’s Tax Policy

In the absence of a comprehensive global tax framework, Ireland’s 12.5 % statutory rate remains the lowest among OECD members. The SBT regime allows a large proportion of Irish corporate earnings to be taxed at rates as low as 0 % for qualifying intellectual property (IP) holdings, which is why the country remains a favorite destination for U.S. technology companies such as Apple, Google, and Microsoft.

Yet the policy is under scrutiny. In 2024, the European Commission warned that Ireland’s tax incentives could be “deemed non‑contributory” if the country failed to provide a “minimum level of taxation” for corporate income. The Commission also suggested that Ireland could face sanctions for the way it treats foreign‑owned IP. In response, the Irish government has tightened its enforcement of the “substance” requirement – companies must now demonstrate a tangible operational presence in Ireland to claim the full benefits of the SBT.

What the Revised Forecast Means for the Irish Economy

The upward revision in corporate‑tax revenue reflects a larger picture: Ireland’s economy remains robust. In Q3 2025, Ireland’s gross domestic product (GDP) grew by 1.9 % year‑on‑year, buoyed by a strong export market and a continued influx of foreign investment. The Irish central bank reported that the country’s credit‑to‑GDP ratio remains at a manageable 62 %, indicating a healthy financial environment.

Economists note that higher corporate‑tax receipts could allow the government to bolster its public‑spending agenda – particularly in health and education – without resorting to higher personal‑income taxes. Yet the global tax negotiations remain a thorn in the side: if the OECD/ EU agreement were to be adopted in its current form, Ireland might have to raise its own corporate‑tax rates or lose a significant share of its tax base.

International Reactions and Future Outlook

The U.S. Treasury Department has expressed both support for a global minimum tax and concern over the potential impact on U.S. multinational profits. In a recent statement, Treasury Secretary Janet Yellen said: “The United States supports a fair and effective global tax system, but it also wants to preserve the incentives that drive innovation and create jobs.” This stance reflects the delicate balance the U.S. seeks between curbing tax‑avoidance and maintaining a competitive environment for its global companies.

Meanwhile, Ireland’s European Commission representatives have reiterated that the EU will continue to press for a coherent tax regime that eliminates “tax‑hunting” practices. “Ireland’s tax regime has to align with the European tax rules,” a senior EU official told Reuters. “Otherwise, we risk losing the benefits of intra‑EU trade and investment.”

On the domestic front, the Irish Fiscal Advisory Council has urged caution. “The revised forecast should be viewed as a positive development, but it must not lull us into a false sense of security,” said Council Chair Dr. Fionnuala O’Connor. “We need to ensure that Ireland’s tax policy remains both competitive and compliant with global standards.”

The Bottom Line

Ireland’s 2025 corporate‑tax forecast now sits at €2.5 billion, reflecting a steadier stream of foreign investment than previously anticipated. The country’s favorable tax regime – especially the SBT – continues to be its main attraction for global MNEs, even as the EU and OECD grapple with a stalled global minimum‑tax agreement. As the international debate continues, Ireland faces the twin challenges of maintaining its tax competitiveness while aligning with emerging global tax norms. The outcome of these negotiations will shape not only Ireland’s fiscal future but also the broader landscape of corporate taxation across the globe.