Fianna Fáil Finance spokesperson Michael McGrath has described an announcement from the UK Chancellor of the Exchequer that Britain plans to cut corporation tax to 17% by 2020 as a potentially major threat to Ireland’s economy. This is the second such reduction in a year. The latest cut brings the UK rate ever closer to our 12.5% level. As recently as 2009 the rate applied in the UK was 30%.

Deputy McGrath has called for targeted measures to retain and enhance Ireland’s competitive position.

He stated, “Ireland has historically used its tax policy in a manner designed to attract and retain multinational investment. At the end of 2015, there were 187,000 people employed in IDA Ireland supported companies. While not all of these jobs can be directly attributed to the impact of Ireland’s corporation tax regime, it remains a vital part of our offering to prospective FDI investors.

“We cannot merely take a defensive role in relation to corporation tax. The international environment in which we compete is evolving rapidly. While we have a strong track record in offering a competitive tax regime to potential investors, the level of competition we face for mobile investment is higher than it has ever been. Our track record will count for little if competitor countries offer a regime that is considerably more favourable than ours.

“It is important to acknowledge that in recent years the attractiveness of Ireland’s offering has declined relative to that of the UK and other competitor countries. The recent UK budget has introduced a number of business friendly measures which will prove attractive for mobile investment.

“It is clear that the UK have taken a very deliberate policy decision to use tax as a lever to attract new business. Ireland must adapt its offering in the face of this heightened threat.

“Specifically Fianna Fáil is advocating:

– A commitment by the State not to agree to the Common Consolidated Corporate Tax Base as currently envisaged

– Reform of Ireland’s tax regime relating to intellectual property to ensure its attractiveness

– Extension of Special Assignee Relief to cover new staff hires

– A reduced rate of capital gains tax up to a specified limit on entrepreneurial activities

– The establishment of a specialist dedicated unit within Revenue to deal with specific R&D tax matters, as well as handling technical appeals in a more streamlined manner”.