Written answers

Wednesday, 15 July 2015

Department of Jobs, Enterprise and Innovation

Foreign Direct Investment

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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123. To ask the Minister for Jobs, Enterprise and Innovation if he expects the recently announced reduction in corporation profits tax in the United Kingdom to impact of foreign direct investment here; and if he will make a statement on the matter. [29291/15]

Photo of Richard BrutonRichard Bruton (Dublin North Central, Fine Gael)
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Ireland continues to perform well in the attraction of new investment and particularly so in recent years as FDI inflows to Europe have slowed considerably. Nevertheless, competition for FDI has intensified over recent years and we need to be continuously alert to differentiating Ireland’s offering to attract investment. My Department's Policy Statement on Foreign Direct Investment, which was published at the end of July 2014, sets out the strategic direction for FDI to 2020 and the key actions needed to enhance Ireland's attractiveness and business environment in the context of intensified international competition for investment and talent. I recently launched IDA Ireland's new corporate strategy for the years 2015 to 2020 which aims to create 80,000 new jobs in the economy over the next five years.

Total employment at IDA client companies now stands at 174,488 people, the highest level in the history of IDA Ireland. The job performance took place against a particularly challenging European economic environment and changing corporate taxation landscape. There were 197 investments in 2014, equating to a 20% increase on 2013. There was a notable rise in new-name investment, with 88 new name investors in 2014.

All FDI is hard won. The range of countries competing for FDI in Europe demonstrates the intensity of the marketplace to secure investments for Ireland. In Ireland's case, it is a range of factors that play a role in influencing location investment decisions. In addition to the strong economic management and certainty on the 12.5% corporate tax rate, these factors include: our relative cost competitiveness; the availability of a dynamic talent pool and our continuing investment in our education and training systems; our focus on building comparative advantage in a range of sectors; and our investments in strengthening our national innovation system.

While no formal assessment has been carried out in relation to the possible impact of a cut in the UK corporation tax rate on Foreign Direct Investment into Ireland, it is well known that Ireland is a supporter of fair tax competition and the OECD has consistently stated that low corporation tax rates combined with a broad base is the best way to encourage economic growth while still maintaining tax revenues.

The US continues to be the largest single investor in Europe accounting for about 25% of all inward investment projects and job creation. While Ireland is a significant recipient of US FDI for contestable investments, competition with the UK, Germany and France, the major overall beneficiaries of US investment into Europe, is intense.

IDA Ireland constantly monitor competitor locations and the value propositions they offer potential mobile investment. Competitor locations differ depending on the sector of the mobile investment. In this respect, IDA Ireland is continuously working to ensure that Ireland is the most competitive, innovative and relevant to the investment being targeted.

Ireland's relative cost competitiveness, corporate tax regime and available direct firm level financial supports remain critically important - but in reality they are no longer aspects that will substantially differentiate Ireland's offering for FDI over the longer term. So in addition to maintaining a competitive offering in these areas we must at the same time redouble efforts to develop and reinforce the aspects that truly differentiate Ireland's offering in a context of intensified global competition for mobile investment in relation to our skills and talent base, our productivity levels and our levels of innovation and the excellence of our science and research base.

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