For decades Ireland’s low corporate tax regime, with its headline 12.5 per cent rate, was a competitive advantage in our foreign direct investment (FDI) proposition. In October 2021 Ireland was among 137 OECD countries to agree a landmark reform of international corporate tax laws to level the playing pitch.
The effects of the Base Erosion and Profit Sharing (BEPS) agreement have now begun to have an impact on Irish tax revenues. With the minimum corporate tax rate having increased to 15 per cent for multinational enterprises with revenues in excess of €750 million, in line with international norms.
While the Irish Fiscal Council estimated in a 2025 report that the rate increase would result in an 18 per cent rise in corporate tax receipts, it has also removed a competitive advantage in Ireland’s FDI toolkit.
Against this background, experts agree that now is a good time for the Government to look at other ways of ensuring competitiveness in our FDI offering.
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“For the best part of a decade, the focus of tax policy in Ireland and globally has been on bringing the regime for taxing international groups to an internationally agreed standard. The Irish system [now] meets those benchmarks. From here, competitiveness must return to the fore of tax policymaking and Ireland should not be timid in that ambition,” says Olivia Long, head of tax policy at law firm Matheson.
Long says it is now time to simplify the regime by removing old rules that overlap with the internationally agreed minimum standard.
“A simplified system not only reduces compliance costs but also makes for a system that is easier to explain to new businesses looking to locate in Ireland. The rules for taxing interest are currently under review with that goal in mind. We would like to see real meaningful reform under that process, reform that acknowledges Ireland’s implementation of international standards and that demonstrates a real ambition to offer a best-in-class regime.”
Harry Harrison, tax partner at PwC, says that for many US multinationals, Ireland’s legal, regulatory and political stability is now as important as tax incentives when it comes to deciding where to locate large-scale investment projects.
“In a post-BEPS environment where tax differentials are narrowing, certainty of outcome, consistency of policy and a transparent legal framework are key decision drivers,” he says. “Ireland’s strong track record in these areas, combined with its common-law system and established FDI ecosystem, provides a compelling value proposition. While tax remains relevant and providing a strong tax-incentive programme is still of vital importance, it is increasingly one component of a broader investment decision.”
Nonetheless, he says, a number of targeted incentives and simplification measures could be introduced to support businesses in navigating the new global tax landscape, while preserving Ireland’s ability to attract and retain high-value economic activity.
These could include a new innovation incentive to help companies scale innovation efforts, enhance productivity and maintain Ireland’s position as a leading technology and innovation hub. Other incentives could include expanding the scope of Ireland’s holding-company regime and introducing a branch exemption to enhance Ireland’s attractiveness as a holding-company location.
Providing 100 per cent first-year allowances for qualifying equipment to encourage investment in cutting-edge technologies and support innovation in high-growth sectors is another initiative he suggests.
Karl Foley, managing director of accountancy firm Farrelly & Scully, says that of the measures Ireland could take to enhance its competitiveness two stand out.
“First, Ireland could adjust its R&D tax-credit mechanism to align with the OECD’s definition of qualified refundable tax credits (QRTC). That would allow tax credits to be treated as direct cash refunds rather than simply reducing a company’s corporate tax liability, making the incentive more attractive.
“Second, for domestic groups operating below the €750 million global revenue threshold, Ireland could expand non-multinational tax supports such as the Employment Investment Incentive Scheme and the start-up relief for entrepreneurs. Strengthening these measures would stimulate capital investment and give entrepreneurs the boost they need to grow.”
More broadly, he says nurturing our talent pool is another important pillar. “We have a highly skilled workforce. That’s one of the main reasons why multinational companies choose to locate here. We need to continue producing and developing that talent, particularly as many skilled workers are choosing opportunities abroad.”
