The IDA has played down the threat to Ireland’s competitiveness of the UK’s plans to slash its corporate tax rate to 15%, saying the tackling of high business costs and ensuring the availability of a skilled workforce are bigger concerns.
At yesterday’s publication of the agency’s performance review for the first half of 2016, IDA Ireland chief executive Martin Shanahan said Ireland currently has one of the most competitive, consistent and transparent tax regimes in the world; which — along with our access to the European Single Market — acts as a huge attraction to foreign companies looking to invest.
Earlier this week, UK chancellor George Osborne unveiled plans to speed up Britain’s scheduled reduction of its corporate tax rate (it had originally planned lowering from 20% to 17% by 2020) in a bid to attract business that may be put off by the country’s vote to leave the EU.
However, Mr Shanahan yesterday raised the issue of doubt surrounding Britain’s continuing access to the Single Market.
“Lowering the corporate tax rate doesn’t mitigate against uncertainty over access to the Single Market. One does not compensate for the other.
"We already knew the UK was on this trajectory [of lowering its corporate tax rate]; we expect such competition.
"All this doesn’t mean Britain won’t be competitive, but things like talent availability will play an increasingly major part in our own competitiveness going forward,” he said.
Also present at yesterday’s event was new Jobs Minister Mary Mitchell-O’Connor, who was at pains to reiterate the Government’s corporate tax stance.
“Our corporate tax rate is 12.5%, is 12.5%, is 12.5%, and it has served us really well,” she said, adding that keeping our competitive edge will depend as much on lowering business costs and ensuring skills availability as having a competitive tax rate and base.
The minister added that available talent is the issue most raised by foreign multinationals, in relation to Ireland, not corporate tax rates. She said she was “fixated” with maintaining Ireland’s competitive advantage regarding foreign direct investment (FDI).
While saying the full impact of the Brexit vote — on the European and global economies and FDI — is still largely unknown, Mr Shanahan said the IDA will be bidding for any investment looking to leave the UK.
That movement is likely to come from the technology and international financial services/fund management sectors.
Mr Shanahan said Ireland has appropriate regulatory systems and commercial capacity to deal with increased investment.
“We’re confident we can deal with the increased level of investment,” he said, noting that there is two million square feet of commercial office space coming on stream, with more in the planning stages.
The agency wrote to all client companies to reiterate Ireland’s commitment to the EU in the immediate aftermath of the Brexit vote and plans to increase its marketing abroad to get the message across to non-client companies.
Bloomberg yesterday reported France has done likewise, with the Paris regional government writing to 4,000 UK executives to promote the business advantages of the French capital, the day after the UK referendum vote.
“The Paris region offers an unparalleled quality of life,” the letter read.
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