Declan Roche, Event Chair; Seamus Coffey, Economist and Chair of The Irish Fiscal Advisory Council; Caitriona Allis, Head of ACCA Ireland and Vincent Murray, Business Director at Hays Recruitment.
One of the central pillars of Ireland’s economic model is under considerable threat with the re-issuing of Common Consolidated Corporate Tax Base (CCCTB) proposal by the European Commission, according to Seamus Coffey, Economist and Chair of The Irish Fiscal Advisory Council.
The proposal would see a single set of rules which would calculate companies’ taxable profits in the EU and allocate those taxable profits to the tax base of each EU country using sales, employment and fixed assets rather than the current value-added approach. This means that for international companies that have their EU (EEA) headquarters in Ireland, the appeal of our 12.5% rate would be significantly reduced as more of their profits would be subject to tax in other Member States rather than Ireland.
Seamus Coffey’s view on the repercussions this decision would have on Ireland’s economy was expressed as he addressed business leaders at an event hosted by the Association of Chartered Certified Accountants (ACCA) in Cork this week. He said:
When compared to other EU countries, the contributions of US companies to the Irish economy are double, sometimes triple that of other nations. On average, other EU countries receive between 2-4% of national income from American multinationals: this compares directly to the Irish economy which owes over 10% of its national income to the presence of American FDI.
He continued: “This includes employment and income contributions as well as tax, investment and infrastructural spending. While there are many reasons for US companies to invest in Ireland including shared language and a highly skilled workforce, the introduction of a CCCTB and a change in the tax environment would see a direct impact on Ireland’s Corporation Tax revenues and a possible negative impact upon FDI across the country.”
Coffey noted that although there are risks in the reliance on multinational companies, criticism of US FDI in the Irish economy misses that its investments have had a remarkably positive impact on the professional environment of Ireland. “Yes, there are risks with the Irish model – but the risk only exists because of how successful it has been,” Seamus explained.
If multinationals didn’t play such an important role in Ireland it wouldn’t be a risk to lose them – they are key to driving growth and it is obviously in our interest to support their presence here just as we would with any other integral part of the economy.