Ireland will not surrender to international pressure over its lucrative corporation tax rate, Jobs Minister Richard Bruton pledged.
Describing the attractive 12.5% levy as a “bedrock” of economic policy, he insisted the Coalition had protected the incentive when the country was at its weakest and would continue to stand firm as the recovery gathered pace.
“Europe has recognised that competing on taxes is here to stay. I think what’s now happening through various multinational processes, we’re looking to make sure that companies can’t aggressively exploit the gaps between different codes,” the Jobs and Enterprise Minister said.
Ireland’s tax regime is back in the international spotlight after US president Barack Obama singled out the country when he branded American companies that claim to be Irish for financial gain as “unpatriotic”.
President Obama said firms were “gaming the system” by shifting their head quarters abroad to places like Ireland in order to avoid taxes back home.
The OECD is also examining if it can crack down on companies engaging in “tax inversion” by exploiting low rates in small countries like Ireland.
Mr Bruton promised to help in international efforts to move against tax inversion, but stressed Ireland would not alter its rates.
Ireland has been strongly criticised on its lucrative corporation tax rates in the EU in the past, especially by France.
Dublin has hit back by saying effective tax rates operated by other European nations are often much lower than the headline figure.
The Minister was speaking as he launched a policy document aimed at creating 7,000 jobs a year via foreign direct investment between 2015-2020.
Promoting Ireland as an attractive lifestyle destination, which also boasts a skilled, mobile workforce, will feature strongly in the IDA strategy.
Mr Bruton said Ireland needs to focus on cutting edge technology areas such as “smart health” in order to prosper as it faces tougher competition as an investment hub.
The minister said that Ireland could no longer fall back on old advantages such as cost competitiveness as he warned that there would be changes to the international tax system that will prove demanding for Ireland.
“Changes will undoubtedly come in the international corporation tax system which well pose challenges as well as opportunities for Ireland and we plan to compete strongly in this area.
“While things are improving, we still have very high unemployment and we have set ourselves ambitious targets for job creation, including replacing all the jobs we lost in the crash by 2020,” Mr Bruton added.
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