The Irish economy has been making headlines around the world for over two decades now. It’s not hard to see why: the Celtic Tiger story is utterly compelling – transforming from one of the poorest countries in western Europe to one of the richest – and the recovery from the recent global recession has been similarly impressive, most dramatically captured by the one-third growth in measured economic activity in one year, 2015.
Today Ireland is once again Europe’s fastest growing economy and commentators who dismissed the Tiger years as Icarus flying too high have had to revise their understanding, and acknowledge the depth and substance of the Irish business model. Other countries might envy Ireland the oxygen of publicity – the headlines, the glowing mentions in financial papers and economic journals, the top ranking in international competitiveness reports. All this cements the country’s deserved reputation as an excellent business location. However, coverage has also come with misconceptions about the structure and nature of the Irish economic model.
The low corporate tax rate is central to this model, and it’s certainly one of the engines driving growth. But we don’t run on one engine. As this report demonstrates, our corporate tax rate is part of a multifaceted package of measures that are attractive to globalised businesses. This includes a highly educated and flexible workforce, ease of access to both the US and the EU, and an ecosystem of collaborative research. Some commentators, both Irish and international, have seen the proposals of the US and UK governments to slash their corporation tax rates (to 15% and 17% respectively) as a threat to Ireland. This perception is wrong and arises from a fundamental misunderstanding about the strength and substance of the Irish business model.
Ibec welcomes the global trend towards lower corporate taxes wholeheartedly. We are proud that Ireland has been to the forefront of stimulating business through competitive corporate taxation to increase investment, trade, employment and tax revenues. We believe that Ireland is in a position of strength to continue this momentum.
It is vital to get this message across now as Ireland faces the unique, generational challenge of Brexit. Ultimately Brexit may represent an opportunity as Ireland becomes the only English-speaking economy in the EU, and one with abiding historic links to the US, but that is not to underestimate the potential risks and instabilities in the short-term.
This phase of our business development will not be without its challenges, but the first challenge this report addresses is our international reputation as an aggressive corporate taxation jurisdiction. We are. And as businesses we know this competitive spirit is the lifeblood of how every nation succeeds. We want Ireland to be the best in the world as a business location, and while we play hard, we also play fair. Tax havens are insubstantial and what this report shows is that the Irish business model is built on what the OECD terms substance.
The Ibec Podcast
Adapting to globalisation
29 March 2018 - Listen back to Ibec CEO Danny McCoy's keynote speech at the Ibec Business Leaders Conference 2018, where he stresses the need for policymakers to adapt to the globalised nature of the Irish economy in order to sustainably manage future growth and retain competitiveness
The Ibec Podcast
The "New New Economy" with Minister Pascal Donohoe
08 February 2018 - Following his address at the Ibec Lecture series, Ibec CEO Danny McCoy is joined by Minister for Finance and Public Expenditure and Reform Paschal Donohoe to discuss 'The New New economy'.