Richard Bruton (Dublin North Central, Fine Gael)

I propose to take Questions Nos. 6 and 18 together.

The latest Central Bank Quarterly Bulletin contains an article on the statistical implications of the corporate structures of multinational companies. The decision of a multinational company to locate headquarters in Ireland can have a very substantial impact on reported direct foreign investment. Its balance sheet, its lending activities to subsidiaries and its corporate earnings all affect the Irish balance of payments and the Irish recorded foreign assets. The author points to the limited usefulness of this direct investment data for analytical purposes as a result. This must be borne in mind in interpreting the data. The article indicates that this data shows Bermuda as a source of significant inward investment to Ireland and a focus for outward investment. There are a number of reasons for this. First, Bermuda is an internationally recognised centre for the global insurance industry. Many of the world's leading insurers and reinsurance companies have operations there. As a result, IDA Ireland regularly visits Bermuda to engage with these companies to encourage them to establish a presence in Ireland to serve their European customers.

Second, the data in the quarterly bulletin captures, in part, the normal flow of investment capital from these Bermudan companies to their Irish operations and from their Irish operations to Bermuda. This is a standard feature of international trade and of intra-corporate capital flows. Following increasing international scrutiny of corporate tax arrangements, several companies based in Bermuda, which has a 0% rate of corporate tax, decided to re-domicile and establish offices in jurisdictions that actually charge corporate tax. A number of these companies selected Ireland for its transparent, internationally recognised and competitive 12.5% corporate tax rate. Bermuda is recognised as a global centre for insurance.

IDA goes to Bermuda every year to encourage companies to set up offices in Ireland and has been successful in that many such companies have set up here in Ireland. IDA stresses that these are companies employing staff and not "brass plate" operations.

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