Fianna Fáil Finance spokesperson Michael McGrath has described an announcement from the UK Chancellor of the Exchequer than Britain plans to cut corporation tax to 18% by 2020 as a potentially massive threat to Ireland’s economy. The latest reduction 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.

Deputy McGrath stated, “Ireland has historically used its tax policy in a manner designed to attract and retain multinational investment in the country. At the end of 2014, there were 174,000 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 at the highest 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. While measures were introduced in the context of an exceptionally difficult budgetary environment, they must also be viewed in the context of the actions being undertaken by our nearest neighbour who 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 I am calling for: 

  • 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
  • A specialist dedicated unit be established within Revenue to deal with specific R&D tax matters, as well as handling technical appeals in a more streamlined manner.”