Support for reform of the international tax system should be part of Ireland’s strategy to encourage continuing foreign direct investment (FDI) in the years ahead, according to a policy initiative to be unveiled on Thursday by Minister for Jobs Richard Bruton.
One of the key elements of the plan is a commitment to retaining the 12.5 per cent corporation tax rate, allied to support for multilateral reform of the international tax system.
Changes in the international tax system are described as a challenge but also as an opportunity for Ireland if they provide the certainty, stability and predictability for potential investors in the years ahead.
Aspects of the Irish tax system were criticised in recent days by US president Barack Obama, who has castigated American companies for “gaming the system” by relocating their headquarters to countries such as Ireland to avoid taxes in the US.
He said US companies were using Ireland to take advantage of “technically legal” tax arrangements. The Government has pledged to co-operate with international moves to close off tax loopholes but is committed to retaining its 12.5 per cent corporation tax rate.
New phase in campaign
The document suggests a new phase in the campaign to attract FDI is required as other countries have copied the Irish model of low corporate tax rates and established agencies similar to the Industrial Development Authority
The policy is focused on creating more than 7,000 net new jobs a year from FDI between 2015 and 2020.
It suggests the next phase of the campaign must be based on portraying Ireland as a great place to live, allied to talent, technology and the development of new sectors.
Mr Bruton asked the IDA to prepare a new strategy for the five years to 2020 outlining a series of targets for jobs, investments and the regions and how they will be delivered.
It will be spearheaded by the agency’s incoming chief executive, Martin Shanahan.
A source close to the Minister pointed out that competition for multinational investment had dramatically increased since the financial crisis and a lot of change was taking place in this area.
Job creation
“While we have seen strong job creation in the past 18 months, unemployment is still far too high. In this context the Minister believes it is vitally important to look to the next horizon to ensure we can continue to add large numbers of jobs in multinational companies here,” the source said.
“That is why [the Minister] is putting in place a strategy to match and beat the record levels of job creation we have seen in multinational companies the past three years. There are challenges but also major opportunities out there for Ireland. With the right policy changes across Government, driven through the action plan for jobs, Mr Bruton is convinced we can hit these ambitious job-creation targets,” the source added.
The ambition of making the country internationally known for developing and nurturing talent, and as an attractive destination for internationally mobile, skilled people, is identified as a key objective.
Another is to make Ireland a place for world-leading research and innovation in close co-operation with industry.
Stress is also placed on selling the country as an attractive location for investment, with the strength of different regions being emphasised as well as a vibrant capital city with a smart business and living environment that hosts a dynamic start-up community alongside corporate heavyweights.
Identifying the sectors in which Ireland can attract investments and jobs is another important element of the plan.
