I propose to take Questions Nos. 109, 176 and 177 together.
Ireland’s corporation tax regime is a core part of our economic policy mix and is a longstanding anchor of our offering on foreign direct investment (‘FDI’).
At 12.5%, Ireland has one of the most competitive headline corporate tax rates in the OECD. This rate is applied to a broad base – a policy which is endorsed by the likes of the OECD as it is good for growth in our economy.
Our competitive corporation tax regime has been an important part of our industrial policy since the 1950s, and has attracted real and substantive operations to Ireland since then. We only have and want real substantive FDI, the kind that brings real jobs and investment into Ireland.
In 2014 the Department of Finance published the Economic Impact Assessment of Ireland’s Corporation Tax Policy. This contained the results of extensive research which was carried out and commissioned by the Department of Finance which sought to quantify the effect of corporation tax policy on the Irish economy.
As part of this project, an independent organisation (the Economic and Social Research Institute (‘ESRI’)) was commissioned to carry out a study into the impact that the corporation tax rate has on the decision of firms to invest in Ireland. This independent research found if the rate had been higher over the period of their sample then the number of new foreign investments into Ireland would have been lower.
The maintenance of the standard 12.5% rate of corporation tax is therefore extremely important for Ireland’s economy. Ireland, like other smaller member states, is geographically and historically a peripheral country in Europe. A competitive corporate tax rate is a tool to address the economic limitations that come with being a peripheral country, as compared to larger core countries. Ireland’s 12.5% corporation tax rate plays an important role in attracting FDI to Ireland and thereby increasing employment here.
This evidence underpins the Irish Government’s continued commitment to the 12.5% rate.