First published in the Irish Examiner - 13th October 2021
The most noteworthy part of the Minister for Finance’s budget day speech from an FDI perspective, that differentiates it from all budget day speeches in recent memory, are the new commitments around our Corporation Tax rate. The Government’s decision announced last week, to increase Ireland’s corporate tax rate to 15% for the cohort of companies with global annual turnover in excess of €750 million clearly represents a significant change in Ireland’s tax offering to investors. Global circumstances and Ireland’s constructive participation in the OECD multilateral process necessitated this change. While we will be moving to a 15% rate for those companies that meet the turnover threshold, crucially Ireland will once again be emphasising the stability and consistency of that rate moving forward. The 12.5% rate will continue to apply to the vast majority of businesses in Ireland. I believe that the new rate of 15% will be competitive and add to that the fact that we will be operating inside a global taxation agreement, it provides the certainty that investors crave.
As I write this I am in the US meeting with investors and the feedback suggests that they had factored in this change, given the strong engagement and communication from Ireland on this issue over recent months. Ireland continues to be well placed to succeed provided we ensure we have a business environment fit for the 21st century economy and retain a strong focus on our competitiveness. In that regard, the announcements in the budget of supports and funding allocated to housing, education, childcare and infrastructural development are to be welcomed as is the €90M aviation package to help Ireland rebuild vital connectivity. These combined measures will strengthen Ireland’s offering as a more competitive place to sell internationally.
The additional €5.5M funding provided to IDA Ireland for targeted grants to attract FDI along with the continued investment in our Regional Property Programme under which we aim to provide more regional properties for investors in 2022 than in any previous year, are welcome supports. The investment allocated for the new Advanced Manufacturing Centre in Limerick to provide state-of-the-art facilities for indigenous and multinational companies to develop new technologies and the continued support, through an additional €1.5M allocation, of IDA’s promotion of Ireland abroad as an attractive location for investment will assist us in our ongoing work. The additional funding allocated for an extension of the Covid Products Scheme to fund testing and fast-track production of products will continue to help in the fight against Covid-19. Another welcome measure is is the new tax credit to support the design, production and testing of digital games.
FDI’s performance to-date this year demonstrates both the strength of our value proposition and the resilience of the sector. That said, we are under no illusion as to the extremely competitive and challenging international environment we are operating in. While competition for foreign investment continues to be intense and Ireland cannot take FDI for granted, IDA Ireland remains steadfast in our determination to partner with multinational companies (MNCs) to drive economic recovery and sustainable growth in the coming years.
Martin Shanahan CEO of IDA Ireland & Adjunct Professor Smurfit Graduate School
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