A taxing issue

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I have to admit to being a little apprehensive listening to the rumblings about the corporate tax rate.
I would imagine that a rise from the current rate to something in the region of 15% may be feasible without losing the major technology multinationals that are currently represented.

Rates elsewhere in the euro zone are all well above this and would give us a bit of head room before we encroach on the some of our neighbours.

• Italy 34.5%
• UK 28%
• Spain 30%
• Germany 26.37%
• Greece 24%
• Portugal 26.5%
(Source: TaxRates.cc)

The problem seems to be that many multinationals here have two different businesses on the ground in Ireland. The first is the business done domestically here. This is a relatively small amount on the global balance sheet for most.
The other business is the way in which many companies seem to be able to direct wider European income through Ireland before going home. Of course, at the Irish tax rate, this means a healthier return than might otherwise be the case. Now, I don’t pretend to know the ins and outs of this, and whether such practices would be in jeopardy with a modest tax rise, is not clear.

That said, some five years ago, Steve Ballmer of Microsoft was asked at an interview in Dublin if the company would pull out if the tax rate was raised. Ballmer said that there was more than the tax rate attracting companies here. While the usual things about the people, the graduates and the education system etc, were trotted out, another interesting item was also mentioned.

Ballmer said that transplanting a graduate from India or China to the headquarters of a technology company in the US was a daunting prospect. He said that a year or two in Ireland first made that transition far easier and benefited both the graduate and the company. He said the corporate culture of multinationals, as practised by the Irish here was a far more accessible and supportive environment for these people, while still achieving its own goals within the organisation.

Now while this is not enough alone, it highlights the fact that we are a little close to things here and perhaps a wood/trees issue is at play as we try to objectively assess what attracts and keeps a multinational technology company here.

Read More: Paul Hearns