British drug firm to become tax resident in Ireland

A BRITISH multinational has announced plans to shift its base to Dublin to avail of the Republic's favourable corporate tax regime.

Shire Pharmaceuticals, an English group with sales of close to $2 billion (€1.27 billion) a year, intends to locate its parent company in the Republic to benefit from low corporation tax and other incentives.

The State charges 12.5 per cent tax on corporate profits, which is among the lowest rates in the European Union. This is reckoned to be a key factor in attracting investment here. Britain recently cut its rate to 28 per cent.

Shire's plan is part of an overall restructuring programme under which it will be incorporated in Jersey and set up a holding company in the Republic.

In a statement, Shire said its directors "believe that the most appropriate structure is for the new group parent company to be tax-resident in the Republic of Ireland". A spokeswoman told The Irish Timesyesterday that investors had broadly welcomed the news. Shire is quoted on stock markets in London and New York.

The British company employs 55 people at offices in Citywest Business Park in Dublin. Moving its parent to the Republic will not result in new jobs here, or any loss of staff in Britain, where its head office is in Basingstoke, Kent.

"Everything will be very much the same as before," the spokeswoman said. One of the differences will be that the company will hold its board meetings in this country.

According to its figures, Shire paid $107 million in corporate taxes to the British exchequer during the first nine months of last year. It is not possible to say how much it will save by moving here, or by how much Irish State coffers will benefit.

A number of tax advisers explained yesterday that, along with the Republic's 12.5 per cent charge, there are two other key incentives that apply to head office or holding company operations established here.

The first is that they pay no capital gains tax on the sale of subsidiaries. The second is a concession on dividends paid on profits earned abroad by subsidiaries that means they either pay no tax on these payments, or pay it at 12.5 per cent.

Former finance minister Charlie McCreevy introduced the extra incentives for multinational head-office activities in the Republic earlier in the decade. They are designed to make the State attractive for a range of activities, including research and development, sales and marketing and financing.

Shire's move is likely to add further fuel to a row in Britain over the Labour government's business tax policies.

Commenting on the decision yesterday, Richard Lambert, director general of the Confederation of British Industry, said the lobby group was worried that an uncompetitive corporate tax system is damaging the UK's attractiveness to businesses and that "other internationally mobile firms will follow Shire's path".

Shire manufactures treatments for stomach and kidney problems and for attention-deficit and hyperactivity disorder.