US MULTINATIONALS are set to be granted an additional five-year exemption by the Government from having to prepare a second set of accounts under Irish or global financial reporting rules.
This move could potentially save them millions of euro and, the Government hopes, protect Ireland’s status as an attractive location for investment.
It is understood Minister for Enterprise Richard Bruton will bring proposals to Cabinet shortly for the legislation to be extended until 2020.
At present, many American companies located here are required by US regulations to prepare their accounts using the US GAAP accounting standards.
Under Irish law, they would also be required to prepare separate accounts using either of the two accounting standards in use here – Irish GAAP or IFRS, a global standard that is not accepted in the US.
This would result in substantial duplication and increased costs for the US firms. It is understood that in some cases, the costs could be as high as €15 million per company.
Legislation introduced two years ago – the Companies (Miscellaneous Provisions) Act 2009 – provided an exemption from the requirement to provide accounts under the Irish rules until 2015.
New legislation will now be drawn up early in the new year to extend this law until 2020.
Mr Bruton has decided to extend the derogation to avoid substantial additional costs being imposed on the US companies for no real commercial gain.
US firms employ about 100,000 people directly in Ireland and account for 70 per cent of IDA-supported employment.
They have a $190 billion foreign direct investment in Ireland. This represents 9 per cent of all US investment in the EU and makes it an important constituency for the Government.
At one point, it looked as if the US GAAP and IFRS standards might be harmonised by the 2015 expiry of the deadline. However, this process has been slowed by the global financial crisis.
In the event of any conflict between US GAAP and Irish law, the latter will prevail.
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