When it comes to economic and tax developments, Ireland doesn’t do half measures. Most countries are accustomed to riding the ups and downs of the economic cycle, but Ireland has made the experience something of a rollercoaster, from the roaring Celtic Tiger economy of the 1990s and 2000s, to the country’s near-bankruptcy at the nadir of the global financial crisis when, at one point, the Government reported a budget deficit in excess of 30 percen of GDPt.
You might have thought that this stomach-churning ride through boom and bust might have tempered ambitions and expectations in Ireland. But not a bit of it. In 2015, GDP was estimated to have grown by a massive 26 percent, although that figure was, it turned out, greatly distorted by a few large assets transfers connected to corporate inversions by US multinationals.
Nevertheless, the economy has … Read More »
Tax reform is expected to not only have a transformative effect on the US itself, but also internationally, as US and foreign investors shift more investment to America. And Ireland is one country worried about the impact of the proposed corporate tax cuts and foreign dividend exemption in the US.
Brexit is often identified as the greatest danger to the Irish economy, given its strong commercial links to the United Kingdom. But, with Ireland’s trade and investment links to the United States arguably even more significant, the economic fall-out could be more serious than a hard Brexit.
Statistics attest to how Ireland’s economic fortunes are intertwined with those of US investors. US investment in Ireland totals USD343bn, and while Ireland represents just 1 percent of the European economy, it attracted 20 percent of all US FDI investment to Europe in 2015. Some … Read More »
We often refer to Ireland’s corporate tax advantage when discussing international tax issues and the competition for foreign investment. Less discussed beyond Ireland’s shores, I’m sure, is its individual income tax disadvantage.
While Ireland’s top rate of personal income tax at 40 percent (recently reduced from 41 percent) is broadly in line with other European countries, it kicks in at a relatively low amount of income (EUR33,800 in 2017). When Universal Social Charge – brought in as part of Ireland’s fiscal retrenchment deal with its bailout creditors – is factored into the equation, this has resulted in a marginal tax rate of over 50 percent for some, which places Ireland among the Nordic nations in terms of individual tax.
By comparison, the UK’s higher 40 percent rate of tax applies to income exceeding GBP45,000 this year, which is the equivalent of more … Read More »
Bashing big business is de rigueur these days – an appropriate use of a French phrase considering the recent early morning raid by (reportedly) around 100 investigators and five magistrates on Google’s offices in Paris. Accusations of aggravated financial fraud and money laundering abound, linked to Google’s headquarters in Ireland. That is quite a joint accusation against one the globe’s biggest businesses.
But it is no secret that France – with Germany – has long held a grudge against Ireland and its competitive business tax and streamlined regulatory environment. That grudge became most apparent when the Celtic tiger lost its teeth during the financial crash, and refused to budge on calls led by those two countries to increase its low (for EU standards) 12.5 percent corporate tax rate as a condition for a bailout.
For more information on this, and other … Read More »
I have a question. How come corporate tax receipts in Ireland account for roughly the same percentage of overall revenue – about 8 percent in 2014 – as they do in the United Kingdom (just under 10 percent in 2012) and the United States (also just under 10 percent in 2010) when corporate tax in Ireland was half the UK rate in 2012, and about a third of the US’s? I could direct that question to the Chancellor of the Exchequer in London, and the Treasury Secretary or any number of senior Congressmen in Washington, but I think they get it already. High corporate tax rates don’t necessarily produce high levels of revenue, because they encourage avoidance and discourage investment. Which is why corporate tax rates have been steadily falling all over the world in the last 10 years or … Read More »
Ireland likes to be different. Just look at how it has kept faith with its 12.5 percent corporate tax rate when it could have easily caved in to international (but mainly Franco-German) pressure to hike it – effectively keeping its head when all about were losing theirs. This low-corporate tax policy was one of the catalysts for the pre-crash Celtic Tiger economy, and now it is partly responsible for Ireland standing out from other euro area economies, with its remarkable economic recovery. Even Ireland’s crash was different to a certain extent, having been precipitated largely by the over-exposure of its banks to a property bubble that the Government largely ignored, rather than dodgy derivatives that few understood. I just hope that lessons have been learned, and that in future, investors will be encouraged to diversify their egg placement, rather than … Read More »
Lately, the European Union has been execrated on a regular basis by this column. Some may think this a little unfair, betraying a natural bias against a continent-sized super-state that has done more to stifle innovation and growth in Europe than to promote it, as it was supposed to do. But it’s hard not to dislike this institution when you see just how much European taxpayers’ money is spent on maintaining a vast army of bureaucrats in Brussels, Luxembourg and Strasbourg. The Commission claims that the EUR8.6bn budgeted for administration in 2015 represents good value for money, because it is only about 6 percent of the EU’s overall budget of almost EUR146bn, which itself is only about 1 percent of the GDP of the EU. This may be true, but perhaps this figure could be even lower if Commission officials … Read More »
The EU Commission’s rather curious attack on countries hosting multinationals smacks of politicking, although the machinations of the Berlaymont (have they finished extracting the asbestos yet?) make the word Byzantine seem like an exercise in transparency. At all events, Ireland has hit back quickly and effectively, sensing yet another concealed attack on its low tax rate, which probably does make up a certain proportion of the Commission’s logic. The other two countries in the Commission’s sights, Luxembourg and the Netherlands, are also “the usual suspects,” with low-tax credentials. It may be significant that the Commission has chosen to act in this way at the end of its current term, possibly wishing to send a pro-OECD message to show that it has taken the BEPS initiative seriously, and it is not difficult to imagine that the OECD, which has seen its … Read More »
As usual during this period of fiscal stress for countries across the world, we look in vain for any cuts in taxes. But at least in Malta they are trying to improve matters for businesses through simplification of the tax system and throttling back the impositions of government. As I say that, I can already hear the offended wailings of the anti-brigade: oh, but Malta is offshore, it is a tax haven, it steals revenue from big “respectable” countries like Germany by helping banks and gaming companies with low tax rates, so that they can’t get the revenue to help their poor, huddled masses to survive the rigors of the nuclear winter we are all trying to survive. Let’s be clear: the “nuclear winter” is a direct result of the debts taken on by those countries’ politicians in pursuit of … Read More »
So far as our news service is aware, no country is planning to reduce taxes this week, but at least in Ireland they are talking about doing so. The Deputy Prime Minister said as much; and a few days earlier the Finance Minister had said the same. They need to, heaven knows, and they have the right ideas, but I have to wonder where they are going to find the dosh. The budget deficit was 7.5 percent in 2013, and will be 4.8 percent in 2014, according to Government estimates, although external commentators think that is optimistic. Ireland’s debt was 25 percent of GDP in 2008, before it started on the suicidal “rescue” of its banks; now the debt stands at 125 percent of GDP, and may rise further. It’s hard to make out whether the Government is actually cutting … Read More »