Speaking after a cabinet meeting yesterday, finance minister Paschal Donohoe said: “The government has given approval today for Ireland to sign up to the political agreement at the OECD Inclusive Framework on a new tax framework to address the tax challenges of digitalisation.”

The first of the two pillars to the agreement will see a reallocation of a proportion of profits to the jurisdiction of the consumer. Pillar 2 will see the adoption of a new global minimum effective tax rate applying to multinationals with global revenues in excess of €750 million.

The agreement aims to help resolve issues brought about by the digitalisation of the economy, which resulted in the international tax framework struggling to accommodate the evolving business models of large multinational enterprises.

The 15 per cent rate will apply to 56 Irish multinationals employing approximately 100,000 people, and 1,500 foreign owned MNEs based in Ireland employed approximately 400,000 people.

For over 160,000 businesses in Ireland with a turnover less than €750million per annum, who employ approximately 1.8 million people, there will be no change to their corporation tax rate of 12.5 per cent.

Mr Donohoe said: “We have seen over the last two years the benefits of innovation – critically in respect to the vaccines which are allowing society now to reopen, but also the role that technology played in keeping businesses open.

“Innovation matters and it is right that the tax system can support this. I am pleased that it has been recognised and delivered in the agreement.”