Ireland still ‘fantastic’ investment location, Varadkar to tell US counterparts

Tánaiste Leo Varadkar will insist that Ireland remains a "fantastic" location for investment despite the uncertainty over the future of the 12.5 per cent corporate tax during a two-day visit to the United States.

The visit to Washington DC comes as Ireland faces pressure to sign up to an Organisation for Economic Co-operation and Development (OECD) deal that would see the introduction of a minimum global rate of at least 15 per cent.

Bill McLaughlin, founder of Irish-American Business Chamber & Network (IABCN), said Ireland is “still viable” as a destination for investment for reasons other than tax.

But his advice to companies for now would be “to hit the pause button until it gets worked out”.

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Ireland-US Council executive director David O’Sullivan said his organisation believes an increase in the tax rate “would be a bad thing” and would “absolutely” harm inward investment to Ireland.

International pressure

Taoiseach Micheál Martin signalled during a visit to New York last week that the 12.5 per cent rate could change in response to international pressure to make multinationals pay more tax.

He said he would not be making commitments to US companies “one way or the other” that Ireland will be keeping the rate that has been a cornerstone of the country’s bid to attract inward investment for decades.

Mr Varadkar, the Minister for Enterprise and Trade, will hold meetings with his Biden administration counterparts US secretary of commerce Gina Raimondo and ambassador Katherine Tai, US trade representative.

US president Joe Biden is supportive of the draft OECD deal but it will have to be approved by Congress where the Democrats have a slim majority.

Mr Varadkar will also take part in a roundtable meeting with the US chamber of commerce during his two-day visit to the US capital.

Asked about his message in the US in the absence of certainty on the 12.5 per cent rate, Mr Varadkar told The Irish Times: “What I’ll be saying to businesses that I meet is that Ireland remains a fantastic place to do business.”

He listed four strengths that “set us apart” including a young, well-educated workforce and competitiveness “underpinned by an attractive business environment, which is a factor of many things, including our tax environment”.

Mr Varadkar also cited Ireland’s connectivity “with a 70 million diaspora and truly international workforce” and its position “at the heart of Europe, its single market and euro zone”.

He added: “We can’t say at this stage whether we will sign up to an international agreement or not, but we’ll only sign up to it if we believe it’s in the interests of our economic interests in the round.”

Mr McLaughlin’s own company McLaughlin & Morgan assists American companies entering the European market though Ireland.

The Philadelphia-based businessman and IABCN founder said one of the missions of a company chairman is to “turn as much profit as you can, keeping costs down and keeping taxes low is a great plus”.

Mr McLaughlin said that he doesn’t believe that major companies would necessarily leave Ireland in the event of a corporate tax increase if the rate remains competitive but also cautioned “companies have moved for lesser reasons than that”.

‘Tough road ahead’

He said the Irish Government has been good at acting fast to support the needs of business and he said a suggestion by Mr Varadkar last week that the 12.5 per cent rate could be kept for businesses with less than €750 million turnover “resonates”.

But he predicted it will be a “really tough road ahead” because “even Joe Biden who loves Ireland” is pushing for an increase in corporate tax rates.

New-York-based Mr O’Sullivan, a former IDA representative in the US, said: “Capital goes where capital is treated well. If you tell a company that you’ve got a deal for 12.5 per cent corporation profits tax . . . and then it becomes uncertain you don’t need to be Einstein to figure out that that would be a cause of concern.”

The Ireland-US Council believed an increase in the rate would “absolutely” be detrimental to investment in Ireland, he said.

IDA Ireland has said it is not its experience that companies are holding off on decisions to locate in Ireland while the debate over corporation tax continues and pointed to a “strong flow” of investments in 2021 to date.