Bernard Durkan (Kildare North, Fine Gael)
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199. To ask the Minister for Finance the extent to which this country continues to remain an attractive location for foreign direct investment; and if he will make a statement on the matter. [31608/22]

Bernard Durkan (Kildare North, Fine Gael)
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205. To ask the Minister for Finance the extent to which Ireland continues to compete with competition for foreign direct investment; the most likely directly from when he expects any challenges; and if he will make a statement on the matter. [31614/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 199 and 205 together.

Ireland has long established itself as a market of choice for foreign direct investment and FDI makes a highly significant contribution to the domestic economy. Ireland’s ability to attract and retain FDI reflects our strong legal and regulatory landscape, our track record as a stable and pro-enterprise jurisdiction, and our talented and flexible workforce. These unique features continue to support our competitive advantages, which are recognised and valued by the multinational sector.

During the Covid-19 pandemic, the resilience of the multinational sector proved remarkable, with the sector supporting the economy during the worst of the crisis and now helping to bolster the economic recovery.

The stock of FDI in Ireland continues to grow, reaching over €1,200bn in the first quarter of 2022. Last year, the Industrial Development Agency reported the highest increase in FDI employment in a single year, indicative of the strength of the FDI sector in Ireland.

Against the backdrop of current geopolitical instability and uncertainty, the FDI environment is likely to face challenges over the coming years. The war in Ukraine may result in a reconfiguration of the global economy while at the same time the pandemic has dealt a significant blow to globalisation. The extent to which this transpires will only be seen with time, but deglobalisation – should it occur – could result in lower levels of global FDI, with impacts on living standards and productivity in host countries.

Given that a number of these factors are beyond our control, we must focus on the factor we can control, ensuring that Ireland remains an attractive environment for FDI investment.

Bernard Durkan (Kildare North, Fine Gael)
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200. To ask the Minister for Finance if the revised proposals in respect of corporation profits tax are likely to have any negative effect on foreign direct investment here; and if he will make a statement on the matter. [31609/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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I understand that the revised proposals in respect of Corporation tax profits which the Deputy is referring to in his question relate to the projected cost of joining the agreement by the OECD/G20 Inclusive Framework on BEPS last October through a two-pillared solution to address tax challenges arising from the digitalisation of the economy.

Pillar One will see a reallocation of 25% of residual profits to the jurisdiction of the consumer. The scope is confined to multinational groups with turnover in excess of €20 billion annually. Residual profit is profit greater than 10% of turnover.

Pillar Two provides that the minimum effective rate is 15% for multinational enterprises with annual turnover in excess of €750m.

It is expected that the Agreement will bring long-term stability and certainty to the international tax framework arising from discussions which have taken place.

Importantly for Ireland, the agreement provides that the minimum effective rate for those companies in the scope of the agreement will be 15%, and this will provide the critical certainty for Government and business alike. At the same time we protected the 12½% rate for out of scope business which will continue to be an important part of our offering in the future.

The agreement will also continue to support innovation and growth, acknowledging as it does the need for innovation incentives such as for research and development.

This is a global agreement, and will ultimately underpin the required certainty and stability in the international tax framework, important to both business and government alike, when it comes to making future investment decisions.

I have long held that there will be a price to pay but it is a price that is worth paying to reduce the risk of disputes and escalating trade tensions. Instead this agreement will achieve greater tax certainty and the removal of unilateral measures such as digital services taxes.

Ireland’s economic success is not simply an accident of history. It has been achieved by identifying our strengths and developing a strong offering that meets the needs of modern business. While Ireland is not blessed with abundant natural resources, we have invested in education so that we have our own resource - a highly educated workforce whose skills meet the needs of modern enterprises.

Ireland’s place in the world is that of a business friendly country, deeply integrated with the global economy, and an ideal location for companies looking to access the EU, the world’s largest consumer market.

The historic agreement achieved at the OECD last October, will provide a platform for Ireland's continued competitiveness and attractiveness for Foreign Direct Investment.