Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Ireland’s low-tax miracle is over

Ireland’s low-tax miracle is over

For a generation, Ireland has had the lowest corporate tax rate in the developed world. It now looks as if Ireland's low-tax miracle is over.
Okay, in fairness it might be the weather. Or the craic in the bars. Or the rugged coastline, golf courses, or the lakes. And yet for all its charms, there was always a far simpler reason why more than a thousand multinational companies have their main European headquarters in Ireland. Tax.

For a generation, Ireland has had the lowest corporate tax rate - just 12.5 per cent - in the developed world. Even better, myriad breaks and allowances - in accounting circles the ‘Double Irish’ is not as you might imagine an especially stiff glass of Jameson’s but a fiendishly clever way of re-routing revenues - often take that down even further.

The result? Companies from Apple to Google to Pfizer have huge operations in Ireland, creating tens of thousands of jobs, and an economy that is among the most prosperous in the world.

But hold on. It now looks as if Ireland's low-tax miracle is over. First, President Biden, despite getting sentimental of his family's roots in County Mayo whenever he faces an electorate he thinks might celebrate St Patrick’s Day, is proposing a global minimum corporate tax rate of 21 per cent.

That won’t make a lot of difference to France (28 per cent), or Germany (30 per cent) or indeed the UK (19 per cent, rising to 25 per cent). But it will make a heck of a big difference to Ireland.

In effect, it will have to double its rate. Now the European Union has joined in. According to a report in the Irish Times, the Commission is pushing for the Irish to end its tax breaks as a condition of receiving its share of the money set to be distributed through the €750 billion Coronavirus Rescue Fund. Raise taxes or you don’t get the cash is the message from Brussels.

In fact, the EU’s position is very odd. Ireland is a net contributor to the EU’s budget, now that the UK has left, so it will be a net contributor to the Rescue Fund as well. In effect, Ireland is being told that in exchange for paying for a bail-out for Italy and Spain it will be forced to wreck the competitiveness of its own economy.

Understandably, Ireland is starting to push back against that. In a speech last month, the finance minister Paschal Donahue attempted to make the argument that smaller countries should be allowed lower levies to compensate for the economies of scale enjoyed by their rivals.

Really? As it happens. Ireland is a member of the world’s largest Single Market, so it can hardly complain its economy lacks scale. In fact, the only credible argument Ireland can make is that as a sovereign nation it is perfectly entitled to set any tax rates it chooses. However, as enthusiastic Europeans that is a tricky one.

And yet, in truth, nothing else will work. Between Biden and Brussels, Ireland is getting caught in a trap. It is hard to see how it can avoid raising its corporate tax rate to 20 per cent-plus to bring it into line with the rest of the developed world.

Of course, it will still have a skilled workforce, the English language, and access to the European market to recommend it to the world’s multinationals as a corporate base. But its four decades as a low-tax corporate hub are coming to an end - and with it four decades of buoyant prosperity may be over as well.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
The Country That Got Too Rich? Public Spending Dominates Norway Election
EU Proposes Phasing Out Russian Oil and Gas by End of 2027 to End Energy Dependence
More Than 150,000 Followers for a Fictional Character: The New Influencers Are AI Creations
EU Prepares for War
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
Big Tech Executives Laud Trump at White House Dinner, Unveil Massive U.S. Investments
Tether Expands into Gold Sector with Profit-Driven Diversification
‘Looks Like a Wig’: Online Users Express Concern Over Kate Middleton
Florida’s Vaccine Revolution: DeSantis Declares War on Mandates
Trump’s New War – and the ‘Drug Tyrant’ Fearing Invasion: ‘1,200 Missiles Aimed at Us’
"The Situation Has Never Been This Bad": The Fall of PepsiCo
At the Parade in China: Laser Weapons, 'Eagle Strike,' and a Missile Capable of 'Striking Anywhere in the World'
The Fashion Designer Who Became an Italian Symbol: Giorgio Armani Has Died at 91
Putin Celebrates ‘Unprecedentedly High’ Ties with China as Gazprom Seals Power of Siberia-2 Deal
China Unveils New Weapons in Grand Military Parade as Xi Hosts Putin and Kim
Rapper Cardi B Cleared of Liability in Los Angeles Civil Assault Trial
Google Avoids Break-Up in U.S. Antitrust Case as Stocks Rise
Couple celebrates 80th wedding anniversary at assisted living facility in Lancaster
Information Warfare in the Age of AI: How Language Models Become Targets and Tools
The White House on LinkedIn Has Changed Their Profile Picture to Donald Trump
"Insulted the Prophet Muhammad": Woman Burned Alive by Angry Mob in Niger State, Nigeria
Trump Responds to Death Rumors – Announces 'Missile City'
Druzhba Pipeline Incident Sparks Geopolitical Tensions
Cost of Opposition Leader Péter Magyar's Economic Plan Revealed
Germany in Turmoil: Ukrainian Teenage Girl Pushed to Death by Illegal Iraqi Migrant
United Krack down on human rights: Graham Linehan Arrested at Heathrow Over Three X Posts, Hospitalised, Released on Bail with Posting Ban
Asian and Middle Eastern Investors Avoid US Markets
Ray Dalio Warns of US Shift to Autocracy
Eurozone Inflation Rises to 2.1% in August
Russia and China Sign New Gas Pipeline Deal
×