The measures announced in Budget 2016 will be a boon to Irish taxpayers and the economy overall, enhancing take-home pay and giving people a bit more spending power to boost the recovery.
Importantly, from an FDI perspective, the reductions in the USC rates will enhance Ireland’s competitiveness in the intense international battle to retain and attract talent, although tax rates remain high by international standards.
Ireland has had a great track record in attracting FDI, particularly from the key US economy. The stock of investment by US companies in Ireland now stands at over $310bn.
Currently, over 700 US companies operating in Ireland employ over 140,000 people directly, and this number is almost matched 1 to 1 in terms of jobs created by companies servicing the needs of the US multinationals.
One of the factors in our success has been the availability of world-class talent, but our competitiveness was eroded during the recession by high levels of personal taxation.
It’s a positive move to see Government start to reverse this trend, but the marginal tax rate remains high, so it is important that the trend continues downward in the next Budget and beyond.
As well as intensified competition from around the globe for the FDI pie, there is an increasing trend among multinationals to seek out locations with strong existing business ecosystems.
Multinationals are increasingly engaged with local service providers to meet the needs of their businesses and are seeking out more innovation in local business networks.
The start-up and entrepreneurial ecosystem is taking on increasing importance in their decisions about where to invest.
The measures announced to improve the regime for the self-employed is a welcome step. Further efforts to encourage more entrepreneurs to start their own businesses, would create added appeal for Ireland among the MNCs.
These and other measures, such as the updated International Tax Strategy, are business and investment-friendly measures, as they bring tax certainty to the fore, which is easily understood by the people making the decisions to locate their businesses outside of the US and elsewhere, important decisions to an economy such as ours, which has always performed well in delivering FDI into the local economy.
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