Ireland will join an international tax agreement that provides for a global minimum effective tax rate of 15 percent for large multinational corporations, the country's finance department announced Thursday.
The development comes as countries participating in negotiations at the Organization for Economic Cooperation and Development (OECD) are meeting Friday to reach an agreement. Ireland had previously been a key holdout to a deal.
"Joining this agreement is an important decision for the next stage of Ireland's industrial policy, a decision that will ensure that Ireland is part of the solution in respect to future international tax frameworks," Irish Minister for Finance Paschal Donohoe said in a press briefing.
The OECD has been working on a deal to address tax challenges in the digital economy. One part of the deal focuses on a global minimum tax, while the other focuses on addressing where large corporations' profits are taxed.
An agreement on a global minimum tax has been a top priority for the Biden administration, which sees a deal as key to preventing U.S. companies from becoming uncompetitive if the U.S. raises its corporate tax rate.
More than 100 countries signed onto a statement in July that called for a global minimum tax rate of at least 15 percent. Ireland, which has a low corporate tax rate, was a notable country that did not sign the statement.
Ireland's finance department said that the OECD agreement that will be discussed Friday clarifies that the minimum rate will be a precise 15 percent. That rate will apply to multinational corporations with annual revenues exceeding 750 million euros.
"Importantly, we have secured the removal of 'at least' in the OECD text as we sought. Some countries wanted higher minimum tax rates, and I believe that our position moderated those ambitions and views in the context of the broader agreement," Donohoe said.
Donohoe said the deal will impact 56 Irish multinational companies, as well as 1,500 foreign-owned entities based in Ireland. About 160,000 companies in Ireland will not see a change to their 12.5 percent corporate tax rate, he said.
A U.S. Treasury Department official said that the department is pleased that Ireland backs the agreement. The department is aiming for a deal to be finalized by the Group of 20 meetings in Rome, Italy, later this month.
A Treasury spokesperson said that Secretary Janet YellenJanet Louise YellenSenate leaders face pushback on tying debt fight to defense bill Treasury refrains from naming any currency manipulators US could default within weeks absent action on debt limit: analysis MORE "is laser-focused on the progress being made to finalize what would be a historic deal, and expects countries to coalesce around the final parameters of a new international tax regime."
Democratic lawmakers also positively about Ireland's announcement.
“Ireland joining more than 130 countries in supporting the establishment of a global minimum tax rate is a significant step forward in leveling the playing field for multinational companies and workers around the world," said House Ways and Means Committee Chairman Richard NealRichard Edmund NealGOP fears boomerang as threat of government shutdown grows House passes giant social policy and climate measure The Hill's Morning Report - Presented by ExxonMobil - House to vote on Biden social spending bill after McCarthy delay MORE (D-Mass.), who is also co-chair of the Congressional Friends of Ireland Caucus.
— Updated at 5:12 p.m.