Ireland’s investment agency does not expect corporate tax changes in the United States to have a significant impact on multinational companies’ continued investment in Ireland, its chief executive said.
Foreign companies employ one in 10 workers in Ireland where the low 12.5 percent corporate tax rate has long made it a hub for multinationals, particularly from the United States, with the likes of Google and Facebook among the major employers.
The equivalent corporate tax rate in the United States was cut to 21 percent from 35 percent last month in the largest change to U.S. tax laws since the 1980s.
“Let’s be honest, this is an effort to make the U.S. more competitive. It will make the U.S. more competitive. That may mean that there are some marginal calls where a company decides to stay in the U.S. rather than come to Europe,” IDA Ireland chief executive Martin Shanahan told a news conference.
“But does it signal a significant change from an Irish perspective? I don’t believe so. I can tell you, sitting here today, that I expect the next couple of months to be strong in terms of investment.”
While down a touch on last year’s growth, employment by foreign direct investment firms rose by 5.3 percent in 2017 – over twice the national average – to reach 210,000 and exceed a five-year jobs growth target two years ahead of schedule.
That did not include any impact from Brexit-related moves by financial services firms, Shanahan said, many of which chose Ireland last year as a base for some operations.
Shanahan said he expected more of such moves from financial services, pharmaceutical and technology firms this year with some still assessing exactly what to do and others advancing their plans.
The IDA said it will seek to increase investment from Europe and growth markets such as China, India and Australia this year. Two-thirds of the 237 companies who invested in Ireland last year were North American, although that was down slightly from 2016.
Shanahan said the nine percent represented by growth markets in 2017 did not reflect the resources the IDA was putting into those areas, and he expected to see that number rise this year, pointing to recent investments from Turkey, Mexico and Uruguay for the first time.
“There are countries that would give their right arm to have the FDI investment we have from the United States, yet at the same time we must try and balance the portfolio,” Ryan said.