‘Striking a new balance; What are the success factors required to realise the economic potential of the US-Ireland relationship as we embark on a new era in business, trade and economics’.
This was the theme discussed by guest panellists Minister for Finance Paschal Donohoe; Former United States Ambassador to Ireland Kevin O’Malley, CEO of Ibec Danny McCoy and Anna Scally, Tax Partner at KPMG Ireland during a roundtable yesterday afternoon. The roundtable was moderated by Sarah Freeman, Managing Editor of Business & Finance Media Group.
If you missed the roundtable, you can see it here.
Key takeaways from the roundtable:
1. Minister for Finance Paschal Donohoe was asked about the ever-evolving discussions on corporate tax regimes between Europe and the United States and the need to strike the right balance to ensure continued cooperation with respect for autonomy. He referenced his meetings at the G7 with Janet Yellen and his understanding of what she wants to achieve, saying:
“I’m really clear on what Secretary Yellen wants to deliver and I think our friends in the US Treasury have an appreciation of the challenges it poses here in Ireland. So we’ll engage closely with each other over the coming weeks to look at what the options are and see if we can find a place that respects the role of legitimate tax competition but also acknowledges the mandate of President Biden and the work that he wants to deliver.”
The Minister acknowledged the body of work that lay ahead, saying: “We have open engagement and structures in place with employers here in Ireland whether they be American or smaller Irish employers. The key is predictability, engagement and each side engaging with each other to understand the constraints on both sides…We have months of work ahead of us.”
He was optimistic about the future in spite of the impending tax regime changes. He said: “I’m very confident about our ability for the Irish economy to continue to be competitive and our ability to continue to be a very positive place for domestic enterprise and investment and American investment.”
Minister Donohoe also spoke about the key factors driving growth and what policy makers can do to support it.
“Here in Ireland it’s the future of the employment wage subsidy scheme. It’s a scheme we designed and had great input from Ibec last year, feels like a lifetime ago now. We spend 400 million euro per month in relation to it. It’s been critical to employers. We’ve indicated that the programme will stay in place until the end of this year.
He continued: “I am expecting a really strong rebound in the second half of this year. There are some signs that that’s already underway. But the strong rebound in the second half of the year shouldn’t distract us from the harm that has been done to the balance sheet of many employers, many of whom will be viable but not viable immediately.”
2. Anna Scally, an international tax partner for KPMG Ireland, was asked about the potentially far-reaching consequences these changes might bring for many of your clients. She shared some insights about the US tax changes and the impact on the international companies based in Ireland:
“We will continue to engage with these companies and help them to understand the impact of the proposed changes on their business, on the market in which they serve.”
Ms Scally also shared some of her Irish client’s opinions on digitisation: “Digital transformation is a critical area, certainly an area we’re talking to our clients about and it’s going to be critical for the continued success and growth of our economy”.
3. Danny McCoy, CEO, Ibec, was asked how Ireland might compete with the rest of the world to entice investment if the tax incentive is lost. He spoke about the goodwill that exists towards Ireland.
“Very often we talk about the characteristics of Ireland. That idea of goodwill, it’s not just that people like you and like to do business although that is a truism in business it’s also the goodwill that you know that there’s certainty around the legal system, the attitude of society to how you move forward so if taxation isn’t going to be the critical determinant as it has been in the past then those other factors, like the education system, the judicial system, how society behaves, the eco system and also proximity to large markets, all of those we should be quite confident on.”
He continued:
“A lot of people have been predicting the demise of Ireland for a very long time and every single movement on corporate tax change is going to be the end of the Irish model. I believe on this occasion, we don’t need to fear that at all.”
He said it was important for a fair taxation system to exist, saying: “The time for minimum taxes is now.”
4. Ambassador Kevin O’Malley was asked whether his belief that FDI is not solely tax dependent still held true and what Ireland could do to retain its edge in terms of attracting FDI into the country. He referenced the tension and anxiety that he could sense in Ireland about what these potential taxation changes might mean.
“The relationship between Ireland and the United States is historic, cultural, political and familiar and recenlty has blossomed into an economic bridge between the two countries and part of that was the corporation tax rate but it was also the education system, the english speaking familiarity that we enjoy with one another, the fact that you’ve had a pro-business government for these past few years. And so the true secret sauce is the nimbleness of the Irish government and its people…Our relationship is bound to continue and prosper.”
Ambassador O’Malley also spoke about the 6 trillion dollar budget that President Biden announced to drive the growth needed in the United States: “President Biden was really making a strong statement, they’re committed to improving our environment and dedicated to climbing chances”.
Read more about the Ireland INC US-Ireland Economic Roundtable series.