Govt stands firm on corporation tax rate

Ireland’s low corporation tax rate is non-negotiable, the Government insisted today.

Senior ministers stressed it was a no-go area amid fears international officials would demand an increase.

Enterprise Minister Batt O’Keeffe said the 12.5% rate was vital in attracting foreign companies to the country.

“It is an aspect of taxation on which the Government is not for turning and it is vital that we keep hammering that message home to the international investor community,” he said.

Mr O’Keeffe said foreign direct investment attracted more jobs in Ireland per head than in any other country, with international firms supporting 240,000 workers.

Speculation that the rate was under threat intensified last month after European Union (EU) Economics Commissioner Olli Rehn claimed Ireland could no longer continue as a low-tax economy.

Ireland’s corporation rate is among the lowest in the EU. By comparison, the UK’s corporate tax rate currently stands at 28% while France is 33.33%.

In the Dáil, Tánaiste Mary Coughlan was adamant the 12.5% rate would be protected.

“I will take the opportunity of saying... the 12.5% corporation tax is non-negotiable,” she said.

Taoiseach Brian Cowen said the Lisbon Treaty ensured taxation was a national issue for sovereign governments.

Ex-taoiseach John Bruton said it would be counter-productive for other states, who would want Ireland to repay its debt, to take away the country’s best source of revenue.