Because Ireland said it wouldn’t raise this. If we raise it by 1% this year, how do you “prove” to the companies that we won’t raise it by 2% next year?
US multinationals alone (never mind other ones) employ 100,000 people in good jobs.
12.5% of something is better than 25% of nothing.

It is “joined up thinking.” The only thing (if anything) that’s going to get Ireland out of this mess is Growth and jobs. Ireland can’t tax its way back into prosperity…

Do you honestly think we’re getting 12.5% out of corporate taxes? :D

Nah, Mark, you’re probably right.
But we are getting 100,000 well paid jobs and all teh subsidary jobs and all the taxes those employees pay…

SaintRuth,

Stop being selective. Just because “they’re creating jobs” doesn’t make it right.

Ireland is BROKE thanks to these crazy tax breaks.

No Mark – but we are getting a lot in PAYE, PRSI and USC in well paid skilled jobs whcih also keeps people off our job seekers allowances!!!

But we are getting 100,000 well paid jobs and all teh subsidary jobs and all the taxes those employees pay…

…right up to the day that the IDA grant runs out and the company decamps to somewhere with even lower labour costs, leaving only a single office with a few people to do just enough work to pull off the Double Irish with the tax returns…

Una Dev – it’s not because of these corporate tax breaks that we are broke. We are better off for them – that much is pretty undeniable, as these corporations would not have located here otherwise. Lots of high-paying jobs are being created that otherwise would not be.

In saying that, the Double-Irish needs to end.

BTW – just so others are sure, we actually have one of the highest collection to stated profits corporate tax ratios in the world. We get most of our 12.5%.

@saint Ruth , Our income taxes are among the highest in the developed world , 42, plus 7 USC , plus prsi etc has us pushing almost 60% on income on any decent level of wage , our corporate taxes at 12.5 plus the loopholes are the lowest levels around , this disparity is incredibly high – Ireland also promised not to raise income tax, yet kite flying suggests a promise might be broken again with earners , but god forbid that any promises on corporations could be broken , I agree we cannot tax our way out of problems but try explaining that to the forthcoming budget , we run the island with a 20b deficit every year currently and to think or suggest that this will be addressed without looking at raising any taxes is absolutely an ostrich approach , the fact that we are so willing to treat the lowest levels of corporate tax as sacrosanct but will attack all the people who live here with tax increases on everything else (such as 23% vat ) , new property tax , water , etc speaks volumes. It isn’t a choice -we have to raise taxes but what is a choice is where we raise them from.

Bob MacBob wrote:

“it’s not because of these corporate tax breaks that we are broke. We are better off for them – that much is pretty undeniable, as these corporations would not have located here otherwise ”

I keep hearing this claim all the time but you know it’s false. Ireland has the lowest taxes in western Europe so a marginal increase will not damage anything. Bob, it is clear you follow Charlie McGreevey in terms of corrupt tax breaks. That is selfish thinking and Ireland is bankrupt because of it.

Yes, Una, it does make it right.

Ireland is NOT BROKE due to the low tax for google and HP and twitter and Elan and Wyatt and Microsoft and Cisco and Intel and on and on.

Ireland is BROKE because of Irish bloody banks.

“Collectively US companies have US$188b in foreign direct investment (FDI) in Ireland. This represents 8% of all US investment in the EU & 5% worldwide.”

US companies alone employ 100,000 people in good jobs (do you know the average salary in Google?) and all those people pay tax so the Irish gov benefits. And all those people buy things so it benefits the local economy.

And Mark, no, they don’t pact up and leave when the IDA grands end. E.g. Intel has been here for 20 years.

Intel’s invested in a bloody expensive unrelocatable physical asset in its fab StRuth; it’s not a good example.
Digital might be a better one, or Dell, or the big pharma companies like Pfizer.
These companies are not altruistic or ideological; they choose the most profitable route, always. If you make it financially worth their while to come to Ireland dressed in a chicken suit and slathered in coleslaw, you’d have a lot of ready-made sandwich fillers walking around.
And while those companies using the Double Irish are paying some of the 12.5% tax, all the companies that you are talking about are using the Dutch Sandwich : http://en.wikipedia.org/wiki/Double_Irish_arrangement#Dutch_Sandwich

The Irish authorities never see the full revenues and hence cannot tax them, even at the low Irish corporate tax rates.

Companies using the arrangement
Major companies known to employ the Double Irish strategy are:
Apple Inc.
Eli Lilly and Company
Facebook
Forest Laboratories
Google
Microsoft
Oracle Corp.
Pfizer Inc.

Dell is a good example. Dell has been in Ireland for 26 years.
Dell even today employs 2,000 people in Limerick and Dublin.

Of course those companies are here because it is lucrative for them to be here.
They are not charities.

‘Saint Ruth @of course those companies are here because it is lucrative for them to be here’ ‘they dont up and leave when the tax breaks end’ – I dont disagree with you – but why then is there such a fear that if the corporate tax went up 1% they would up and leave / stop being lucrative to operate here.

@ Una, please, are you allergic to jobs or something?

Daft daft daft comment Una. Really? Please do some research before posting

Your comment reveals your state of mind.

Provided you live in Ireland!

And what about ethical ??

@ Stephen Church

The downside to your argument is that taxes on ordinary Irish people get increased to make up that shortfall. Don’t you see that?

Brillant and legal…

@jim – ethics and business rarely mix

Mark – no we dont , facebook , intel, google, apple etc wouldnt even be here without this tax loophole , so it does more good than harm to our economy.

Look up double irish with a dutch sandwich to get details of how this works.

@Stephen Church

The right-winger Fine Gael’ers wrote these ax breaks into Irish law to benefit their cronies. These companies keep most of their profits and never re-invest them into jobs. The country is running a deficit of €20 billion because of these tax voids.

@its student , i think youll find they still pay corporation tax, also 20 billion , still lower than all social welfare spending combined , how bout we abolish that instead.

That it does Una. It’s a terrible thing to want to bring business into this country.

@stephen
‘Ethics and business rarely mix’ …
is a strange,naive and too general a statement to make.

I don’t know what your experience in business is but ethics are taken very seriously by companies internationally, despite what you may have learnt in ‘left-wing’ school – The banking sector excepted

@Student
The IFSC was a fianna Fail initiative in the mid eighties

@insider I don’t think anybody really disputes the all the good that comes from multinational FDI for Ireland, many of whom are not here solely for the tax breaks , we are the only English speaking country using Euro , have a good track record in having a well educated workforce , good age demographics etc etc But the rate in the UK for example for corporate taxes is double, 25% v 12.5% , and yet the general mantra that is being used all the time is ‘all the jobs will be lost , all the major companies will leave….and you really need to wonder if they would actually not weigh up the pros and cons….companies like Ebay that target the massive online market in the UK from here are able to do so from Ireland and pay HALF the corporate tax level…they are extremely unlikely to uproot and try do a similar operation to target the UK market from say Czech Republic or Poland if we were 13.5% and they were 12 ?? or indeed any other non english speaking country…they are unlikely to move to UK to operate and then pay almost DOUBLE the rate ….even we were 13.5 % v 25% we would be far more likely to retain these operations.. would it really be Armageddon ??, these companies want to target the massive Euro Market it is a lucrative market and while I appreciate that many vested interests don’t like paying more tax , no one does , it seems to be incredible that we will seriously consider increasing incomes taxes further on the people who pay some of the highest taxes in the OECD ——but won’t even countenance a marginal increase on the lowest corporate tax in Europe without churning out the same scare tactics-they will all up and leave, to where exactly ???.

@Dave Hammond: I’m afraid you don’t really appreciate how companies make decisions. Ireland is a tiny country on the periphery of Europe. We have lots of points stacked against us, e.g. the tiny size of the domestic economy, the cost of transporting raw materials into Ireland, the cost of transporting final products to their final destinations for sale. We cannot be compared to the UK. (And by the way, everyone in Malta speaks English, the same in Cyprus and, effectively, also in the Netherlands – all in the Eurozone). For these reasons, we need to compensate with other attractions, such as low taxation.

More importantly, we DON’T have among the higest levels of personal taxation in the EU or the OECD. This is a total fallacy. Income tax as % of GDP in Ireland was 11th highest in the EU in 2010, while social security in Ireland was 26th highest (i.e. almost the lowest) in the EU in 2010. While both rates have likely increased a bit since 2010, they are still far from being the highest. (In the same year, corporation tax was recorded as 10th highest in the EU, so not exactly at the bottom of the pile). See http://ec.europa.eu/taxation_customs/resources/documents/taxation/gen_info/economic_analysis/tax_structures/2012/report.pdf

These loopholes should be closed. Otherwise, we will have to pay property taxes and water charges to fill this tax gap. The downside of tax breaks to rich corporations.

The loop holes are written and designed by Irish financial services sector. Every transaction that goes through Ireland, some these firm make a killing

and the Irish financial services sector were previously exposed as corrupt.

@ Mark Malone: The sort of so-called “loopholes” addressed in this article are not written and designed by the financial services sector. They are enacted by the Government, on the advice of IDA Ireland, the Revenue Commissioners and, no doubt, lobbying groups on behalf of multinational corporations (MNCs). Not everything has to do with the banks you know!

It’s incorrect to refer to IFSC companies as “letter box entities” Irish Funds are required to have a minimum of 2 Irish domiciled directors, have the majority (if not all) board meetings in ireland as well as admin and transfer agency also being carried out in the State. Similarly, IFSC banks are all Irish registered in accordance with Irish Company law and prove huge employment to a skilled workforce. This is one of the few industries in ireland that is growing year on year so I don’t think it’s correct to write them off as “letterbox” entities.

Una Dev
Your the one talking nonsense. There are at least four EU Member States where it is possible to negotiate a zero rate of corporate taxes.

Una Dev
You’re the one talking nonsense. There are at least four EU Member States where it is possible to negotiate a zero rate of corporate taxes.

Éamonn Tiernan

Not quite. It works this way: I could hire someone living in Ireland to register me and channel my funds through them in order to get generous tax treatment. The problem with this = unethical and contributes to a boom-bust economy.

Low taxes failed to protect Ireland in 2009 when HP, Dell, Pfizer etc left Ireland.

But surely the generous tax treatment retains more multinationals which provides more tax receipts from PAYE / USC etc as well as lower social welfare payments…Dell etc moved out of Ireland due to uncompetitive rates of pay in comparison to Poland, for example.

A healthy Financial Services industry does not lead to boom / bust economics.

Competitiveness is NOT low taxes. It is low wages. Honestly, this is textbook stuff.

Paddy Rodgers

Perhaps you could name those four EU states? I would like to look into your claim that they can negotiate a “zero rate”.

Mark Dalt – Pfizer employ more people in Ireland than any other country outside of the US. 4000 Irish jobs is hardly leaving the country..!

Dr Jim Stewart, senior lecturer in finance at Trinity College Dublin, produced a report into the IFSC which found that many treasury management firms in the IFSC were little more than ‘brass-plate’ firms or ‘letter-box’ companies with zero employees. He surveyed 41 firms and although they had no staff, the median size in terms of gross assets was $379 million, with a median profit of $6.3 million. The figures were from 2002, as these were the earliest available to Dr Stewart. It is not surprise that in 2005 the IFSC was labelled by the New York Times as the “Wild West of European finance”.

@Mark Dalt: As others have pointed out, Dell and Pfizer are still in Ireland; Hewlett Packard is also still here and actively recruitingin fact. Companies restructure all the time; that’s the nature of business; the close certain units and open new ones. The key point is that Ireland has managed in most cases to secure new investments by the same companies, even when certain older businesses become unprofitable here or are exited worldwide. That is partly due to our tax rate.

By the way, ALL countries engage in efforts to attract companies, but they employ different means of doing it. Ireland happens to be good at it and is particularly successful because we have a very transparent tax regime. In France, the headline rate of corporation tax is much higher than here but companies can write off so much of that tax that many of the biggest companies in France pay almost nothing. You can’t just look at the rates.

I agree, this is no standard boom bust cycle! huge money, huge immigration, huge morons in charge. By the time this bust is over, we will have more than a country to build.

Nonsense. Where will they go? All other European countries are higher taxed than Ireland.

Una, three seconds of googling will tell you which countries already have low corporate tax rates. Another minute of research will tell you the effective rate in France.

Duplicate comment above

Thems the rules. Now which kind soul has the balls to change them.

I’ll tell you what’s immoral, 450,000 people unemployed.
And you jokers want increase tax to increase that number…

All I can say is, thank god that the journal in no way reflects mainstream irish public opinion…

@saint ruth….and how exactly does an increase of 1% in corporate tax increase that 450000 if as you say they are operating here because it is a lucrative business and they wont up and leave when the tax breaks end ? How is it that we can contemplate raising the highest levels of income taxes on workers but not 1% on the lowest level of coprorate tax available ?

@Dave Hammons It’s because companies crave stability. If you promise a stable rate and then change it, companies start to question other promises and commitments. They Ireland becomes a less attractive proposition. Nobody’s claiming (at least I am not) that companies will suddenly up and leave if we increase corporation tax by 1%, but we may well lose the new investments which are so vital to creating new employment (which in turn generates additional income tax revenue).

As I wrote elsewhere, it is arguable that we will generate much more additional corporation tax income by leaving the rate steady and convincing new companies to set-up here than by increasing it by a point or two and risk losing prospective investment to other countries that are perceived to be more stable. This is not a science, it’s psychology and we have to use all the plus points at our disposal to convince companies to invest here when the country’s reputation is not exactly fantastic.