THE news that US pharmaceutical giant Pfizer and the Dublin-based multinational Allergan have scrapped their $160 billion merger may not be of immediate interest to most Irish people — but it should be.
The reason is that the United States Treasury has introduced rules to curb so-called ‘inversion’ deals that, up to now, allowed major industries cut their tax bills by setting up shop abroad. The merger would have allowed New York-based Pfizer to cut its tax bill by relocating its HQ to Ireland.
Ireland has for years been a favoured destination for big US companies because of low corporation taxes, and we should not kid ourselves that it is because of our highly educated population and EU membership, though these factors help.
Encouraging this form of foreign direct investment makes Ireland particularly vulnerable because, while it is welcome, it is transient. Our success in attracting foreign multinationals may have reached its peak, which is why any future government should instead place greater emphasis on homegrown enterprises to fuel our resurging economy.
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