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

Tánaiste Leo Varadkar will insist that Ireland remains a “fantastic” location to invest in despite uncertainties about the future of 12.5 percent corporate tax during a two-day visit to the United States.

The Washington DC visit comes as Ireland is under pressure to sign an Organization for Economic Co-operation and Development (OECD) agreement to introduce a minimum global tax rate of at least 15 percent.

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

His advice to companies for the time being, however, would be to “press the pause button until it works”.

David O’Sullivan, executive director of the Ireland-US Council, said his organization believes that raising the tax rate “would be a bad thing” and would “absolutely” harm foreign investment in Ireland.

International pressure

Taoiseach Micheál Martin signaled on a visit to New York last week that the 12.5 percent rate could change in response to international pressure to get multinationals to pay more taxes.

He said he will not give US corporations “one way or another” assurances that Ireland will maintain the phrase that has been a cornerstone of the country’s efforts to attract foreign investment for decades.

Secretary of State for Enterprise and Commerce Mr. Varadkar will hold meetings with his counterparts in the Biden administration, US Secretary of Commerce Gina Raimondo, and Ambassador Katherine Tai, US Trade Representative.

US President Joe Biden supports the draft OECD deal, but it has to be approved by Congress, where the Democrats have a slim majority.

Mr. Varadkar will also participate in a round table with the US Chamber of Commerce during his two-day visit to the US capital.

When asked about his message to the US in the absence of any certainty about the 12.5 percent rate, Mr Varadkar told The Irish Times, “What I am going to say to the companies I meet is that Ireland is a fantastic one The place remains to do business. “

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

Mr Varadkar also mentioned Ireland’s connectivity “with a 70 million diaspora and a truly international workforce” and its position “in the heart of Europe, its internal market and the euro area”.

He added: “We cannot say at this point whether or not we will sign an international agreement, but we will only sign it if we believe it is in the interests of our economic interests around the world.”

McLaughlin’s own company, McLaughlin & Morgan, supports American companies entering the European market via Ireland.

The Philadelphia-based businessman and IABCN founder said one of the missions of a corporate chairman is “making as much profit as possible, keeping costs down, and keeping taxes down is a huge plus.”

Mr McLaughlin said he did not believe that in the event of a corporate tax hike, large corporations would necessarily leave Ireland if the rate remained competitive, but also warned that “corporations have moved for lesser reasons”.

“Difficult way ahead of us”

He said the Irish government had been good at acting quickly to support business needs, and he said a suggestion made by Mr Varadkar last week that the rate of 12.5 percent would apply to businesses with less than 750 Million euros in sales could be maintained, “resonates”.

But he predicted it was going to be a “really tough road” because “even Joe Biden, who loves Ireland” is pushing for corporate tax rates to rise.

Mr. O’Sullivan from New York, a former IDA representative in the United States, said, “Capital goes where capital is treated well. When you tell a company that you have a 12.5 percent corporate tax contract. . . and then it becomes unsure that you don’t have to be Einstein to find out that this is cause for concern. “

The Ireland-US Council believed that increasing the rate would be “absolutely” detrimental to investment in Ireland, it said.

IDA Ireland has said it is not its experience of companies holding back decisions to settle in Ireland while the corporation tax debate continues and has pointed to a “strong flow” of investment in 2021 to date.