The Blog

Influencing Factors for Foreign Direct Investment: Ireland's low corporate tax rate

My recent blog on the indifference of the electorate to the Irish elections attracted a comment which I felt deserved attention.

My recent blog on the indifference of the electorate to the Irish elections attracted a comment which I felt deserved attention.

A reader stated that politicians are accustomed to rewarding the large corporations and imposing more taxation on ordinary people, leading to a lack of trust in the political system.

I can't deny that there certainly is a sense of bewilderment with politics in the current circumstance in which we find ourselves, the €3.6 billion slip-up being the tip of the iceberg.

However, I certainly do not think that politicians are simply rewarding large corporations, nor should the low corporation tax in Ireland be portrayed in this way.

Foreign direct investment is one of the most important assets that this country has in its financial portfolio and the country must at all costs strive to hold on to it. A recent survey by Matheson Ormsby Prentice pointed out that with the United States holding the largest proportion of inward investment employment in Ireland; 600 such companies are employing over 100,000 people here.

So while it may seem that the government is out to get the little guys and keen to protect the big fish; with increasingly large bites being taken out of people's pay packages and not so much being taken from the large corporations, there is certainly method to their anti-Robin Hood madness.

We desperately need these companies to retain an interest in investing in Ireland, our economy is very dependent on such income and every time we let one slip away, many more people are out of a job. Let's face it, the economic turmoil might be getting CEOs hot under the collar, but it's certainly not for all the right reasons.

We are not exactly the most attractive country on the market at the moment; a low corporate tax rate is one of our only not-so-secret weapons needed to secure a date with some of the most enviable corporations out there. And it cannot be denied that we happen to be catching the eye of a few big names; with Google, Amazon, and Facebook already getting cosy in the Capital, we've also managed to get interest from the new big shot on the social media scene. Twitter is the latest social media giant to announce that it is flying in to establish a base to see what all the fuss is about.

Our current list of suitors should not make us too smug however; not a lot can tie such companies down, particularly when we look at the fact that at present the majority of these big companies happen to be technology firms. Their products travel easily and the tech crowd travel also, with a large number of their employees coming from abroad to obtain work with these big names. We need to continue to make Ireland as attractive as possible, and while the Land of Saints and Scholars is reputable for its skilled workforce and the not so saintly welcome to be found at the local pub, such factors would probably not be enough to keep the attention of those corporations providing a large amount of the inward investment into the economy if the low corporate tax rate were to be done away with.

So while I understand how frustrating it may seem when it appears that the politicians consistently reward the big guys while turning their backs on those that need help, in reality helping the 'big guys' is crucial to Ireland's success in attracting sustained and growing Foreign Direct Investment.