Tuesday, 3 December 2019

Questions (47)

Éamon Ó Cuív

Question:

47. Deputy Éamon Ó Cuív asked the Minister for Business, Enterprise and Innovation the discussions taking place between her Department and the relevant development agencies to reposition enterprise policy in view of the changes in the tax regime of the United States of America and other changes taking place worldwide that could reduce the attractiveness of Ireland to foreign direct industrial investment; and if she will make a statement on the matter. [49684/19]

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Oral answers (6 contributions) (Question to Business)

Will the Minister accept that there are huge changes taking place worldwide in regard to those attractions that Ireland has, for example, on the taxation front? What discussions are taking place at a high level to reposition Irish foreign direct investment to meet the new challenges that are definitely coming down the road, such that in eight or nine years' time rather than relying on the past, we will be building a totally new future? Every 20 years, we need to reposition ourselves in this market.

I thank the Deputy for raising this issue.

There is no doubt that the international tax landscape has seen much change in recent years. There has been real progress in global actions aimed at addressing international concerns around the taxation of multinational companies. There have been significant changes in how companies are taxed internationally and how the taxation regimes of countries interact with each other. My colleague, the Minister for Finance, has ably steered a course for Ireland through this ongoing transition by providing transparency, stability and certainty to the greatest extent possible. These are the features of a tax code that businesses truly value. 

The publication of Ireland’s corporation tax roadmap in September 2018, outlining the steps taken to date and the timelines and options for future changes, demonstrated this commitment to transparency and certainty. Ireland’s continued participation in OECD discussions on the future reforms of digital taxation is further evidence of our engagement in this reform process.

Ireland has continued to attract foreign direct investments.  In fact, since the US tax reforms were enacted almost two years ago, IDA Ireland reports that 2018 saw 134 new name investments compared to 111 in 2017, an increase of over 20%.

These successes illustrate that our corporation tax regime, while important, is only one element of Ireland’s value proposition for FDI.  Ireland has a number of key strengths that continue to make us a highly attractive destination for FDI. These include our highly-skilled workers, excellent education system and positive demographics. Our membership of the EU and eurozone and pro-enterprise policy environment are other significant selling points. These strengths help IDA Ireland to provide a strong case to investors considering investing in Ireland. They also help to explain our strong national performance in terms of FDI-driven investment and job creation, with over 230,000 people now employed here by IDA Ireland client firms.

We certainly have had a great run of it but towards the end of her reply, the Minister touched on changes taking place, particularly in the USA, over which we have no control. Does the Minister agree that the lead-in time for an industry setting up in Ireland from the first contact with IDA Ireland could be anything up to eight years? Therefore, we are currently getting decisions on situations that were initiated six to eight years ago. I do not expect all the multinationals which have invested here to move away. The problem is the pipeline of six to eight years time. Other than the obvious advantages outlined by the Minister, that of education, a growing population and so on, what repositioning is taking place because changes are occurring which change some of the advantages that Ireland had? We cannot deny it. We always claimed in the past that tax was part of the package and I have no doubt that it was.

I understand from IDA Ireland that the pipeline of FDI companies coming to Ireland is still strong. While we have been successful I agree that we cannot be complacent. IDA Ireland will publish its new 2020-24 strategy early in the new year. It will build on the success of the current strategy which has exceeded targets around investment and job creation and with inputs from a wide variety of stakeholders, aims to ensure that Ireland retains its attractiveness for FDI. Future Jobs Ireland is the Government's framework for preparing Ireland for the challenges it faces for the economy of tomorrow. Each year, a report is published which sets out the annual steps needed to deliver on the ultimate goal of increasing our economy's resilience and future-proofing it. It focuses on key policy areas and enablers such as innovation, technological change, productivity, skills, labour force participation and the transition to the low carbon economy. This will lead to the creation of productive, sustainable jobs by ensuring that we have skilled people working in quality jobs in sustainable sectors.

The Minister has not really addressed the purpose of the question which was to examine events outside the island and ask how we are responding. We already know that we are good in education, in demography and we are in the Single Market, so we have those advantages. Please God, we will also have access to the British market and will retain it. It is a big market. Tax regimes are changing, as the Minister pointed out, and have already changed quite substantially. Let us think beyond 2024; what about 2024-30? Are there serious discussions looking at what other countries are doing and what we should do to reposition ourselves to keep ahead of the game? The biggest danger in policy is always complacency with something that has succeeded up until now.

We continue to increase our footprint in other areas of the world. I recently returned from a trade mission to South Africa and Kenya. The population there is expected to increase by 1 billion over the next 30 years, I think. There are huge opportunities there. We are increasing our footprint in China and there was a trade mission to Japan some weeks ago. It is about not being over-reliant on one particular region and spreading our footprint into emerging economies. IDA Ireland is in the process of finalising its new strategy which will take account of the developing international tax environment. We must also consider our indigenous companies. The most important thing is to ensure that we support our indigenous companies in investing in R&D and innovation so that they can compete, scale up and reach new markets. Being competitive is the most important thing.