Dáil Éireann Debate, Thursday - 16 October 2014
1. Deputy Dara Calleary asked the Minister for Jobs, Enterprise and Innovation the steps being taken to implement his Department’s policy statement on foreign direct investment; if recent developments in respect of Ireland’s corporation tax regime have impacted on this; and if he will make a statement on the matter. [39377/14]
View answerAs this is the first Question Time with the new ministerial team, I wish the Ministers of State, Deputies Gerald Nash and Damien English, every success in their new roles and acknowledge the work done by Deputy John Perry and the Minister of State, Deputy Sean Sherlock, in the Department.
Will the Minister outline the changes to our corporation tax regime since Tuesday? Will he confirm the reports in The Irish Times this morning that he has launched what it calls a co-ordinated campaign of letters and telephone calls but which everybody else would call spin and a panic reaction? Will he also confirm whether the Minister for Finance, Deputy Michael Noonan, is involved in the campaign?
The question tabled is slightly different from that just asked by the Deputy.
Recent developments.
I presume the context remains the same. The question refers to the Department’s policy statement on foreign direct investment which was published at the end of July. It sets out the strategic direction for foreign direct investment to 2020 and the 14 areas of strategic action needed to enhance Ireland’s attractiveness and business environment in the context of intensified international competition for investment and talent. Some are focused specifically on the work of IDA Ireland, in relation to which IDA Ireland is in the process of preparing its corporate strategy for the years 2015 to 2020 which will be launched early next year and on which I am working closely with it. Other areas for strategic action focus on building Ireland's strengths in key sectors, aligning our research prioritisation with other supporting elements to build sustainable clusters. This is being factored into the work of Science Foundation Ireland and Enterprise Ireland. It will receive further attention in our forthcoming policy reviews of enterprise and science, technology and innovation.
As the Deputy acknowledged, in the budget announced this week we have moved to provide the certainty and competitive advantage needed to ensure our corporate tax regime is well positioned to win more foreign investment in a changing international tax environment. The statement on foreign direct investment also underlines the importance of work throughout government to develop and reinforce aspects that differentiate Ireland’s offering in a context of intensive global competition for mobile investment. These include the need for a national talent drive and a range of attractive regional alternatives for mobile investment and talent, with competitive infrastructures to support them. Implementation in all of these areas will be vigorously pursued through the process for An Action Plan for Jobs.
With regard to the specific questions on corporate tax, I strongly welcome the decision of the Minister for Finance to introduce a wide range of reforms in respect of our corporate tax structure. These include the introduction of a knowledge development box, improved provisions for research and development, improved conditions for capital allowances in respect of intellectual property and an improved provision to allow strategic personnel to be brought to Ireland to develop key elements of growing businesses. These are very exciting developments in our tax code and naturally we are taking every opportunity to promote them vigorously with our clients. They arise in the context of the base erosion and profit shifting, BEPS, process, which, as the Deputy knows, has signalled significant change in the international tax environment. It includes changes to double structures and part of this announcement is a lead-in time of six years within which the existing double structures in Ireland will be ended.
I welcome the introduction of the knowledge development box which has huge potential. I have always wondered about moving our investment in research and development into reality. The BEPS process is under way and may not finish for at least 12 months, but we have declared our hand right at the beginning of it. We have raised the white flag because of pressure from competitor countries for foreign direct investment. We have immediately rolled over and in so doing for the first time have shown a weakness in our defence of corporate tax. On Tuesday the Minister for Finance, Deputy Michael Noonan, defended the 12.5% rate, but the reality is that he rolled over very early on other elements of the BEPS process. This will be used against us by competitor countries in providing certainty for those who want to invest.
Is the Minister for Finance involved in the co-ordinated campaign of letters and phone calls referred to in The Irish Times today? Can the Minister describe the tone of the conversations he had yesterday? I understand that he cannot go into the specifics. What plans do the Minister and the Ministers of State in his Department have, apart from the scheduled trade visit to the United States in two weeks, to drive this message home?
The Deputy knows that the international environment for tax provisions is changing. What we are doing here is moving ahead of the competition. We are anticipating those changes and putting Ireland in a position to provide certainty to our investors and to have best-in-class competitive tax structures. The Minister for Finance has signalled that he will legislate next year for a best-in-class knowledge development box. That will, as Deputy Calleary has said, give Ireland an edge in this area.
We are also providing certainty. There is no doubt that there has been considerable uncertainty around double structures in light of the discussions internationally. We have now moved to end Ireland's double structure for new investors by January 2015 and we have provided a six-year period during which those companies that currently have such structures need to adjust. We have given them the certainty of a long lead-in time. They now know where the landing position will be. Clearly, the Minister for Finance, Deputy Noonan, will be involved in explaining the new tax structure during international visits, as will my Department. I will take advantage of next week's visit to the United States to explain it. I believe it is an excellent news story and will win additional foreign investment for Ireland.
The reality is that we are at the start of a process and the Minister has declared our hand. The base erosion and profit shifting, BEPS, process could go on for a long time, and many of our competitors may not go as far as we have. The Minister for Jobs, Enterprise and Innovation and the Minister for Finance could learn a thing or two from people like John O'Shea when it comes to fighting for our interests and standing up for ourselves without declaring our hand right at the beginning of the game.
Deputy Calleary is seeking to present this in a very distorted way. We are taking a competitive lead in this area. We will have a best-in-class knowledge box and the best environment for bringing talent to Ireland to engage in research and development from an Irish base.
We could have had all of that anyway.
We will have certainty for those companies that have been using taxation structures whose days are clearly numbered. They will have a long lead-in time to deal with that. We are offering a very competitive environment that in a post-BEPS world will make us a country that is best placed to win international investment.
