Three-quarters of UK-based companies favour Ireland's tax regime above all others, a new survey from KPMG has found.
The annual survey of senior tax decision-makers in the largest publicly-listed companies and foreign subsidiaries in the UK puts Ireland (with 75% of votes) above the UK (65%), Luxembourg (42%), Netherlands (38%) and Switzerland (27%) in terms of respondents’ preferences.
The report also points to a decline in the attractiveness of the UK’s tax regime after the Brexit vote. While it again features in the top three, the gap between Ireland and the UK has widened considerably, the report notes. Back in 2015, the difference was just 1 percentage point; now it has extended to 9 per cent, driven largely by the experiences of non-UK owned firms.
“Looking more closely at companies’ responses this year, it is clear that Ireland has retained much of the appeal it has enjoyed since 2014,” the report says.
Respondents were also asked to identify the one country they believe to be the most attractive as a destination for FDI – and again Ireland rose to the top, leapfrogging the UK with 39 per cent of the vote, followed by 24 per cent for the UK and 16 per cent for Luxembourg.
Attractive destination
“Among non-UK companies, Ireland has significantly improved on its position in a short period of time,” the report says, noting that in 2015 it ranked sixth but it is now the most attractive destination for foreign-owned companies in the UK.
Brian Daly, head of Brexit with KPMG in Ireland, says it is good to see that Ireland’s corporate tax environment continues to be seen in such a good light. However, he warns that for Irish policymakers “there is no room for complacency”.
“To respond to the challenges and opportunities of Brexit it will be important that our overall social, business and regulatory environment is also strongly rated and seen as such internationally.”
Relocations
When it comes to potential Brexit relocations, the Netherlands and Ireland are identified as the most likely destinations, with Ireland leading the rankings for the competitiveness of its tax regime and its appeal as a destination for FDI.
When it comes to sectors, however, the Netherlands is voted the most likely destination for all but one : manufacturing.
“What these responses indicate is that the attractiveness of the UK as a destination for FDI was dented in 2016,” the report says.
