Corporate tax policy ‘will not change’

Taoiseach Leo Varadkar has warned EU officials that Ireland remains “committed to our stable and competitive tax regime” and has no intention of changing our coveted corporate tax policy.

Speaking at the opening of US multi-national firm LinkedIn’s new Europe, Middle East and African section headquarters in Dublin, Mr Varadkar said that despite renewed pressure from Brussels there is no reason to alter Ireland’s existing tax rules.

In his state of the union speech last Wednesday, European Commission president Jean-Claude Juncker hit out at Ireland’s coveted 12.5% corporate tax system, saying “harmonisation” of tax levels must take place across the EU.

The comments were strongly rejected by Finance Minister Paschal Donohoe at an EU meeting in Tallinn, Estonia, last Friday, with Mr Donohoe reminding counterparts that existing EU treaties protect Ireland’s right to decide its tax levels without interference.

While Mr Juncker repeated over the weekend that tax harmonisation remains a key objective of Brussels officials, Mr Varadkar yesterday re-emphasised the fact that Ireland will not increase its corporate tax levels as there is no reason to do so.

“The Government is committed to maintaining our stable and competitive corporation tax regime, and our strong incentives for research and development, so we can continue to attract and retain inward investment and create high-quality jobs.

“When LinkedIn first came to Ireland in 2010 we were in the middle of one of our darkest periods economically. But today, thanks to the sacrifices of the Irish people and the policies pursued by Government, our economy has recovered.

“This [the new LinkedIn headquarters] is a strong endorsement of the Government’s economic and job creation strategy, because it reaffirms that Ireland is the perfect location for investment,” the Taoiseach added.

Mr Varadkar’s comments were repeated by Tánaiste and Employment Minister Frances Fitzgerald, who told the same event that Irish agencies are continuing to work hard to attract “high-quality” direct investment —an issue which is increasingly prominent due to the fallout from Brexit.

While the Taoiseach did not take questions at the event, the fact he chose to address the stand-off between Ireland and other EU member states over our corporate tax rate during a speech at the headquarters of a multi-national firm benefiting from the situation was a clear indication of his ongoing commitment to the rate.

The issue is expected to be raised again by Mr Juncker and other EU states — including Germany and France — which would be in line to attract greater foreign direct investment if Ireland’s corporate tax rate was reduced in the coming months.

The Government was last week backed in its determination to continue the existing tax regime by Fianna Fáil and Sinn Féin finance spokespeople Michael McGrath and Pearse Doherty.

However, both opposition TDs also noted that Ireland must shoulder some of the blame for being targeted by the EU in light of the Apple investigation.