The day after the backing of the 15 per cent Irish plan, the minimum global corporate tax, the technology companies that attracted the republic to the historically low tax on fir are now waking up to the possibility of a radical change.
“Ireland has long sold the stability and certainty of its regime as an attractive feature for foreign investment,” Seamus Coffey, a lecturer in economics at Coke University, told AFP.
“I don’t think such stability and certainty can be considered credible right now.”
On Thursday, Finance Minister Pascal Donohue said Ireland had suspended its efforts against global tax reform efforts led by the Paris-based Organization for Economic Co-operation and Development (OECD).
The purpose of this scheme is to stop the multinational corporations from cutting tax bills on the basis of race at low prices.
Since 2003, Ireland has imposed a 12.5 percent tax on corporations.
It has been accused of being a tax haven for the country, and Dublin has emphasized the need for lower taxes to attract foreign investment and employment.
Coffey said a 2.5 percent increase in the corporation tax would not cause employers to leave Ireland in the short or medium term.
The way in which Ireland was strongly armed by the OECD and the G7 nations can long remain in the minds of employers who regard Ireland as a new prospect.
“The importance of changing the corporate tax rate in Ireland due to external, external influences … should not be discounted,” he said.
“The investment pipeline is not as accessible as it used to be.”
Facebook, Google and Apple have large offices in Ireland.
According to Technology Ireland’s industry lobby group, the digital sector accounts for 13 percent of the country’s GDP and employs 210,000 people.
The technological boom can be most clearly seen in Dublin’s “Silicon Docks”, which have metal and glass office centers for Google and Facebook, located high above the capital.
IDA Ireland, the government’s investment agency, said the country has become a global technology hub in attracting IT and IT companies’ strategic business ventures.
In a country of only five million, the 12.5 percent rate has been a major draw.
Frank Barry, a professor at Trinity College Dublin, says:
“That’s the main problem with changing it now that it’s pretty much a brand,” he said.
There are also suggestions that removing Ireland’s tax advantage would allow large and densely populated economies to outperform high-level playgrounds.
But Ireland’s stability with the majority of nations in the tax transaction has also given companies the specificity they have long coveted.
Donoho said Dublin had taken a major concession in the OECD draft deal, removing a clause on a minimum rate of at least 15 per cent and allowing investors to raise it further.
“It is a sensitive and practical decision taken by the government for the benefit of our country,” he told reporters on Thursday.
“Clients will certainly welcome our closeness to that consistent specificity and stability,” said Joe Bollard, Ewe Ireland Tax Partner.
“Seeing Ireland as a positive partner in that regard is playing well with investors.”
Crucially, the OECD agreement also includes proposals to charge corporate profits in the countries in which they operate rather than where they choose to base themselves.
It will have far-reaching implications for digital companies and will shatter the business logic of going to different beaches than Ireland.
Barry said he was “honest” about the nation’s expectations for technological skills and investment that went beyond damaging Ireland’s “brand” of low taxes.
“Large countries … want to get their hands on tax revenue,” he said.
“Despite the large amount of corporate tax levied, Ireland has always been more concerned about job implications.”
France and Germany reach historic agreement on global corporate tax rates
© 2021 AFP
Excerpt: Irish Technology Division Measures Implications of the Global Tax Plan (October 8, 2021) Retrieved October 8, 2021 from https://techxplore.com/news/2021-10-irish-tech-sector-implications-global.html .
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