New 15% corporate tax rate will not cause investment to dry up, tax adviser says 

Irish Tax Institute president Tom Reynolds said implementation of this new corporate tax regime would be complex and called for Revenue to be properly resourced to deal with it

Irish Tax Institute president Tom Reynolds said Ireland’s reputation was of a stable, open, and tolerant democracy, which is a huge asset in attracting foreign investment.

Foreign direct investment (FDI) will not dry up due to new corporation tax rules but Revenue must be properly resourced to deal with the new regime, the president of the Irish Tax Institute has said.

At the beginning of this year, the new 15% corporation tax rate for businesses that generate revenue above €750m a year came into effect. This follows the decision by the Government to sign up to the OECD’s Two Pillar agreement in October 2021 which sought to set a minimum corporate tax rate among members. 

Companies with revenues below €750m will retain the previous corporation tax rate of 12.5%.

Irish Tax Institute president Tom Reynolds said his optimism was “dependent” on the Government making Ireland more competitive by delivering on reforms to simplify the business tax code.

“The cost and ease of doing business were as important as our 12.5% rate in the investment decisions of the companies I have worked in,” he said.

Mr Reynolds said the implementation of this new corporate tax regime would be complex and called for Revenue to be properly resourced to deal with it. He warned there would inevitably be tax disputes and audits by Revenue.

“We need Revenue to be supportive and pragmatic in bedding in the period ahead,” he said, adding the competition for foreign investment was intensifying as bigger countries like France and Germany join the fray.

“We cannot afford to lose ground,” he said. 

Mr Reynolds noted Ireland’s reputation was of a stable, open, and tolerant democracy, which is a huge asset in attracting foreign investment.

“But that reputation could easily be undone. In the current testing times, we must all play our part in protecting it. We all have a role.” 

He said there needed to be a “workable resolution mechanism” to deal with disputes, otherwise businesses could end up in lengthy tax legal processes, potentially with multiple tax authorities.

“Companies are realistic, and they will get on with it. But after a decade of upheaval in international tax, they need certainty and space to get on with growing their businesses,” he said.

Mr Reynolds has been a chartered tax adviser since 1992 and a council member of the Irish Tax Institute since 2008. He is currently global head of tax for the Schneider Electric owned industrial software company, Aveva.

The Irish Tax Institute is a representative and educational body for  chartered tax advisers. It claims to have more than 6,000 members.