Michael McGrath (Cork South Central, Fianna Fail)
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In July 2022, the Government Statement on the Role of Data Centres in Ireland’s Enterprise Strategy was published. The Statement sets out the strategic importance of data centres to Ireland through their central role in the twin, and complementary, transitions to the digitalisation and decarbonisation of our economy and society. While it acknowledges that not all existing demand for data centre development can be accommodated, this infrastructure remains an important part of Ireland’s value proposition as an investment location for future-focused sectors such as artificial intelligence, quantum and edge computing. The Statement outlines principles that will ensure that the data centres that can be accommodated are done so in a manner that contributes to our climate and digital ambitions. This will ensure that, over the longer term, Ireland can build the foundations for a net-zero-ready economy and society

The Government’s Climate Action Plan 2024 sets out the roadmap to deliver on Ireland’s climate ambition. The Plan addresses, amongst other objectives, and building on progress made to date, our ambition to further decarbonise our electricity system. We will seek to further decarbonise our electricity grid while simultaneously pursuing the electrification of sectors such as transport and heating and, crucially, preserving our security of supply and the reliability of our grid.

With regard to taxation, as a small open economy, connected to Europe, the US and the wider world, Ireland is committed to a competitive, transparent and stable corporation tax system. As the Deputy will be aware, the trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%, while larger businesses with a global turnover in excess of €750 million will now be subject to the Pillar Two minimum effective tax rate of 15%. Some of the main features of the current corporation tax regime are its simplicity and that it applies to a broad base.

Imposing additional taxes on certain sectors would involve increased complexity and could change the attractiveness of Ireland's corporate tax regime. While it is possible that imposing an additional tax on data centres could lead to a short-term theoretical gain, there is a risk of such a tax leading to lower levels of economic activity in the sector, putting in jeopardy our climate and digital transition ambitions, and to companies passing the additional tax burden onto their suppliers or consumers. For these reasons, it is not intended to introduce a specific tax on data centres.