Seamus Coffey was speaking ahead of UCC’s policy forum tomorrow, a think-in to examine Irish development over the next 20 years.
Speakers include Mr Coffey on FDI; food business and development department head Thia Hennessy on the agri-food sector; lecturer Bernadette Power on Irish stocks before and after the financial crisis; and lecturer Lisa Noonan on Irish foreign-owned manufacturing productivity.
Mr Coffey said Ireland is currently in a sweet-spot for attracting investment, employment, and more recently corporation tax revenues from foreign multinationals, particularly from the US.
“The sweet spot is that US companies are looking to invest abroad and we have attracted companies that are undertaking a lot of physical investment such as building bio-pharma plants and data centres. These companies also have significant employment numbers here. One objective of changes in how companies are taxed is to force companies to align profit and substance. US companies have substance here and they are now moving their intangible assets here as well,” he said.
The main external risks to this sweet spot are the common consolidated corporate tax base (CCCTB) from within the EU and changes to US tax law, said Mr Coffey.
“The impact of the CCCTB would be large but I think the chances of it happening are low. There will likely be some changes to US tax law but the impact on Ireland is unlikely to be significant.”
He said CCCTB, which has faced stiff opposition from Irish politicians, would “hugely erode our tax base and would completely alter the environment” in which multinationals make investment decisions in the EU.
“An immediate impact would be the loss of around half of our corporate tax base, with corporation tax expected to bring in around €8bn this year,” he said.
“Ireland’s FDI strategy is risky but one reason it is risky is because it is so successful. There are threats to the sweet spot we are in but we are doing incredibly well from it at the moment.”