A senior British government official has boasted that the UK is winning foreign investment from companies that would otherwise have located in
Ireland
, because its
government has overhauled its corporation tax regime to make it far more competitive.
David Gauke, the exchequer secretary to the UK Treasury department, said at the weekend Britain is now "top of the list" for big investments from multinational companies, especially in the pharma and technology sectors that have traditionally preferred Ireland.
“A few years ago [Britain] wasn’t even making the shortlist. There is increasingly the sense that the UK is as competitive and attractive as other jurisdictions, whereas previously multinationals might have looked at Ireland,” he said.
Advertising giant
PricewaterhouseCoopers told a British Sunday newspaper it is in talks with "more than 100" multinationals looking to relocate their headquarters to Britain. Companies such as advertising giant WPP, which relocated to Ireland from the UK almost six years ago, have committed to return because of the overhaul of the tax system.
Mr Gauke last month led a British mission to the US to drum up investment from big multinationals and he touted the UK’s new corporation tax regime as its big selling point.
Its corporation tax rate falls to 20 per cent next year – still higher than Ireland’s 12.5 per cent rate. But Britain’s “patent box” package of tax incentives is seen in the UK as giving it the edge for some types of investment.
The patent box, which attributes a 10 per cent corporation tax rate to the profits earned on products patented in the UK, is currently under investigation by European officials to see if it breaches state aid rules however.
IDA Ireland said yesterday it was well aware of the resurgence in tax competition from the British and that it is "advising the Irish Government what policy initiatives can be taken in order to ensure that Ireland's offering remains competitive".
“The UK competes with Ireland in a number of areas including pharma, internet and technology. The UK’s patent box is a typical example of a policy initiative taken in order to attract foreign investment. The UK has certainly been making policy initiatives to improve its product offering to international investors in recent years,” said the IDA.
Feargal O’Rourke, a tax partner at the Dublin office of PWC, said Ireland now has “a fight on its hands” because of the renewed competition.
“I am 25 years in this business, and this is the first time that the UK has been a real credible threat to Irish inward investment. It is a real threat to Ireland maintaining its fair share - or even its unfair share - of this investment,” he said.
Mr O'Rourke said the IDA remained "the best in the world" at attracting inward investment, alongside the investment agencies of Singapore, but that the UK had improved the level of "joined-up thinking" among its various agencies and arms of state.
IDA 'constrained'
"The IDA is doing a fantastic job, but it is constrained by its resources. It is outnumbered on the US west coast by five to one by British officials. We now have a big competitor right on our doorstep," he said.
He said he was less concerned about Ireland losing existing investments, but the country is at greater risk of losing out on new investments.
Pfizer has suggested that it will relocate its headquarters to Britain, where it could take advantage of the tax incentives of the patent box, if its proposed £63 billion (€76.6 billion) bid for AstraZeneca goes through.
