In his Budget 2017 speech, Finance Minister Michael Noonan, TD, said that Ireland’s 12.5pc corporation tax will not change in the aftermath of the UK’s Brexit vote.
As well as the controversial Apple tax judgement by the EU, Brexit also poses an enormous risk for the Irish economy.
Noonan pointed out that 16pc of overall Irish exports go to the UK but for indigenous firms, this is 40pc of their exports.
“The UK’s decision to exit the European Union represents a real risk to our economy given the close links and the high level of trade between us. Around 16pc of Irish exports go to the UK, but 40pc of indigenous company exports go there. In turn, Ireland is the UK’s fifth biggest export market. Over €1.2bn of goods and services are exchanged between us on a weekly basis.
“This trade supports 400,000 jobs, split evenly between the two islands, with many more jobs in the supply chain.”
Is Ireland ‘Brexit-ready’?
While the word prudent was bandied about a lot in the Finance Minister’s speech, there was a defiant undertone to Noonan’s words.
“I want to state now that Ireland’s 12.5pc corporation tax will not be changed and nobody is asking for it to be changed.”
The pretext to this is Brexit, but also bruised feelings over the EU’s decision to hit Apple with a €13bn tax bill for its operations in Ireland – a decision Ireland intends to fully appeal.
Noonan said that if anything, Brexit adds an urgency to Ireland’s preparations to defend its edge in attracting foreign direct investment.
And corporation tax is key.
“It is an important part of the reason why we are an attractive destination for foreign direct investment, and the UK’s exit from the EU may present opportunities to attract businesses that may move out of the UK, or are considering locating there in the coming years.
“In addition, we have a highly educated workforce and a business-friendly environment. Other major advantages include being an English-speaking economy in the eurozone and the fact that there is already a critical mass in the financial services and other key sectors.”
Noonan said that he published an update on Ireland’s international tax strategy that demonstrates Ireland’s commitment to meeting new international tax principles. It also shows how Ireland’s corporate tax regime remains fair but competitive.
“In 2014, my department published a review of corporation tax policy,” Noonan said.
“Since then, there have been many developments in international taxation, including the OECD’s base erosion and profit shifting initiative and legislative proposals from the European Union.
“In this context, Ireland needs to ensure that our corporation tax code continues to meet international standards whilst also delivering tax certainty for business and maintaining our competitiveness.”
Noonan said he has appointed independent expert Seamus Coffey to undertake a review of Ireland’s corporation tax code.
Minister for Public Expenditure and Reform Paschal Donohoe, TD, revealed the outline of a cohesive response by the Irish Government to Brexit.
He revealed that as part of a “Brexit-ready” strategy, Enterprise Ireland and IDA are to get more staff to assist indigenous companies to attract overseas investment post-Brexit.
He added that the Department of Taoiseach, the Department of Foreign Affairs and Trade, and the Revenue Commissioners will also get funding to be “Brexit-ready”.