Daniel Bunn, president and CEO of the Tax Foundation,
presented a chart to those attending a tax conference hosted by the United
States Council for International Business in Washington, D.C., that
showed IP payments from Ireland to the U.S. between 2008 and 2026. Those
payments, according to the illustration, were well below €10 trillion ($11.4
trillion) between 2008 and 2019 and then jumped to over €40 trillion by 2026.
The information, Bunn said, shows the effect of both the 2017 tax act, which, among
other changes, lowered the top U.S. corporate tax rate to 21% from 35% and
the elimination of a popular tax planning strategy known as the double Irish
Dutch sandwich. The structure, whereby European sales were routed through a head
office with no employees or physical presence, was used by many large U.S.
technology companies to avoid withholding taxes in Europe.
O'Reilly, deputy head of the OECD's tax policy and statistics division and head
of its business and international taxes unit, addressed the impact of the
global minimum tax, for which the first returns from companies are due at the end of
the month. At this point, he said, it is too early to assess how well
the regime is working.
Nearly 140 countries agreed to the 15% minimum tax, known as Pillar Two, in
2021, and a deal reached in
January exempts the U.S. from the provision with the understanding
that it imposes its own minimum tax requirements. The January agreement
recognized that the U.S. tax regime — and potentially others — could operate
"side by side" with Pillar Two.
O'Reilly said "Let's wait and see whether the rule … that we are now putting into place
or happened in the last couple of years is really working," he said.
"It's not time yet, because we have not yet seen the full effects of the
rules that are in place."
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