Is a minimum international level of corporation tax a threat to Ireland?

fly_agaric

Kind of funny (seeing that sort of "horse-trading" + demand for special cases start) given this quote from Rishi Sunak on day of G7 announcement.

These seismic tax reforms are something the UK has been pushing for and a huge prize for the British taxpayer – creating a fairer tax system fit for the 21st century.
This is a truly historic agreement and I’m proud the G7 has shown collective leadership at this crucial time in our global economic recovery.

https://www.theguardian.com/world/2021/jun/05/rishi-sunak-announces-historic-agreement-by-g7-on-tax-reform

blackwhite

Kermit.de.frog wrote: »

Check out the front of tomorrow's FT

http://cf.broadsheet.ie/wp-content/uploads/2021/06/E3YsoqjWQAAsz4H.jpg

The Brits want an exception of course.

Who'd have thought that Boris Johnson's Government would agree to something, and then immediately start demanding changes and exemptions from what they agreed? :pac:

fly_agaric

Nijmegen wrote: »

Why would it take them years? Tik Tok went from 20 to 1,100 employees in Ireland in 1 year, according to their own press release. They've since taken more office space that will accommodate up to 2,000 staff. Now, that's a contraindication to the idea that they'll pull out of Ireland, but this situation will evolve over time. I guess my point is that MNCs can move very quickly when it suits them. See also those that pulled out of Ireland for lower cost domains in the past.

Given the negative attention TikTok has attracted in past from Western countries incl. the US as regards how it handles data I wonder is it very important [to TikTok] that our very weak & company friendly DPC is handling it? They're hardly likely to ever set up in Germany I think!
Although data protection is potentially another area where a light touch approach to suit the companies may eventually result in Ireland being bypassed by others finally getting p-eed off.

Kermit.de.frog

Seems to me the UK has totally undermined the whole thing within a couple of days by merely mentioning exceptions.

Optics seems to be something in short supply for politicians today.

Nijmegen

fly_agaric wrote: »

Given the negative attention TikTok has attracted in past from Western countries incl. the US as regards how it handles data I wonder is it very important [to TikTok] that our very weak & company friendly DPC is handling it? They're hardly likely to ever set up in Germany I think!
Although data protection is potentially another area where a light touch approach to suit the companies may eventually result in Ireland being bypassed by others finally getting p-eed off.

You could be right and this speaks to the idea that it's not all linear - we have a strong basis to lay claim to be a great place to invest if tax is no longer the leading indicator. So there are investments we will win - and keep - because of that, or because it's too much hassle to just unwind your existing investment, etc. But new investments - from new companies or those here thinking of scaling up - will be more of a competition than an automatic win on tax, and all the other non-competitive stuff (namely, our humungous cost of living and wage costs) will hurt us extremely badly.

Again, no real acknowledgement of this or how to handle it from policymakers.

fly_agaric

Nijmegen wrote: »

You could be right and this speaks to the idea that it's not all linear - we have a strong basis to lay claim to be a great place to invest if tax is no longer the leading indicator. So there are investments we will win - and keep - because of that, or because it's too much hassle to just unwind your existing investment, etc. But new investments - from new companies or those here thinking of scaling up - will be more of a competition than an automatic win on tax, and all the other non-competitive stuff (namely, our humungous cost of living and wage costs) will hurt us extremely badly.

Again, no real acknowledgement of this or how to handle it from policymakers.

For a long time they've just been denying it (evil day where other countries will manage to agree to restrict multinationals from doing their tax arbitrage) can ever happen. The other stuff (non tax) that will help keep Ireland attractive is hard, long term work, and taking action to fix some problems of high costs in the Irish economy (land, housing, rents, legal costs) would upset powerful lobbies or annoy some voters.

hotmail.com

blackwhite wrote: »

Who'd have thought that Boris Johnson's Government would agree to something, and then immediately start demanding changes and exemptions from what they agreed? :pac:

Good, hopefully the whole thing falls apart and America don't get their way.

Larbre34

Could see that coming a mile off.

And its not just the US, all it needs is a few critical dissenters within the OECD and its dead in the water.

Today would be a great day to raise our own rate to 14.5% in fact!

Podge_irl

Ireland doesn't even have the lowest corporation tax rate in the EU. Surprisingly, there has not been a massive outflow of businesses from Ireland to Hungary.

McGiver

Nijmegen wrote:

But new investments - from new companies or those here thinking of scaling up - will be more of a competition than an automatic win on tax, and all the other non-competitive stuff (namely, our humungous cost of living and wage costs) will hurt us extremely badly.

How does Denmark or Norway attract FDI despite massive labour costs and cost of living?

Nijmegen

McGiver wrote: »

How does Denmark or Norway attract FDI despite massive labour costs and cost of living?

Depends on the investment. Denmark won a data center from Apple the same time we did. Ours was still in planning hell when the ribbon was cut in Denmark opening theirs. Ours got shelved. They got a second one.

We will compete not only against lower wage economies, but also high cost economies that aren't as dysfunctional on key matters like planning or housing or similar. And sad to say, but Ireland has not been minding the shop on a lot of things lately. Next up, our power grid infrastructure seems to be getting rickety.

Experts say an unprecedented rise in demand for electricity coupled with the growing needs of data centres raise the likelihood of power shortages and risk making Ireland less attractive as a destination for multinational firms

Not just the power grid, but also our water infrastructure... #Can'tPayWon'tPay.... #OopsNoJobs

“The availability of high-quality, competitively priced and resilient water and energy supplies is vital to enable IDA Ireland to continue to attract high levels of foreign direct investment. This would include resource-intensive clients in the life sciences and technology sectors.

Our tax pampered us and we've become slow, lumbering and high cost. Not a great combination for continued success if the tax alone becomes less of a factor.

greenfield21

SNIP. Don't just paste links here please.

NIMAN

NIMAN wrote: »

We are the only English speaking country in the EU, surely that has to be some sort of selling point?

Plus, if all countries agree and actually charge the same CT, why would these companies up sticks and leave if the CT is going to be exactly the same in the country they are moving to? They could avoid moving and set up costs by staying here.

The level of understanding of the reality of the situation in Ireland is shockingly low.

The younger Germans and Dutch speak better English than us.

We are an island and due to this everything that requires physical transportation is expensive.

We have a limited workforce.

Most of the large companies are in Dublin where the cost of living for a young family with both working is far in excess of most capital cities in Europe.

Our health system is not as good as many of the major Western European systems.

Very few of us speak a second language fluently while throughout other Western European countries it is fairly standard among employees of the large multinational companies we are ultimately talking about which employ almost half of us in Ireland.

I could go on but that should be enough to demonstrate how crucial our low corporation tax rate and other tax related incentives are.

If only American companies were incentived to relocate elsewhere we are in deep trouble as the knock on effect on the economy will be devastating.

listermint

listermint wrote: »

How many times do you have to be pulled up on your quality of life nonsense. On all indicators internationally Ireland performs hugely positively on quality of life. Your consistent baseless negativety that completely contracts the numerous international studies on this subject is astounding.

It doesn't matter that we rank well on quality of life versus 194 other countries.

It matters that there are a couple of countries in the EU that can take enough of our MNC to cause serious economic struggles here if we don't maintain a tax advantage.