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Doing Business & Investing In... IRELAND
Ireland’s attractiveness for FDI Most people will be familiar with Ireland’s low tax regime and while the 12.5% rate is very attractive, it is important to note that tax cannot be seen as an isolated FDI driver. The truth is that companies usually assess a number of competing factors when choosing a location for foreign investment. Ireland’s increasing level of cost competitiveness, educated work force, improved infrastructure, government support and impressive track record have been the determining factors for many multinationals to locate here.
Availability of skilled labour: The availability of talented and flexible employees has been a key attraction for companies setting up/expanding Irish operations. Recent surveys have shown that the share of population aged 25-34 with third level qualifications is higher in Ireland than in the US or UK and above the OECD average. Furthermore the IMD awarded the Irish workforce as number one for their flexibility and adaptability. Due to the fact that Ireland has a long history of being home to multinational companies, there is a deep pool of management talent with MNC experience for companies wishing to set up operations in Ireland. Access to markets and infrastructure: While the domestic market remains small, Ireland’s proximity to continental Europe and membership of the European Union means that it is an ideal location for gaining access to the 28 countries of the EU and other countries in the EMEA region. This is particularly true for US multinationals as Ireland is only a five hour flight from the east coast of the US and the time difference from the east coast is only five hours making Ireland an ideal location from which to serve Europe.
DOING BUSINESS & INVESTING IN CONOR HYNES & LOUISE KELLY
DELOITTE
With Forbes recently identifying Ireland as the best country in the world to do business in 2013, the future for FDI in Ireland is brighter than ever. Conor Hynes, Tax Partner, Deloitte Ireland together with Louise Kelly, Tax Director, Deloitte Ireland explain why Ireland is a prime location for FDI.
Companies across many sectors are basing their EMEA headquarters/principal companies in Ireland. In the life sciences sector, we have seen an increasing number of companies seeking EU approval for their products before seeking FDA approval in the US, due to the lengthy FDA approval process and many of these companies are using Ireland as a springboard for the European launch of their product.
In the past five years the Irish telecoms industry has invested €2.5bn in infrastructure which has supported a significant number of technology and gaming companies setting up Irish operations. This highlights the significant steps which Ireland has made to transform itself into a technological hub, and as a result all of the top ten global technology companies are located here.
Government support/policy: In addition to taxation incentives implemented by the Irish Government there are a range of services and a number of grants available to those considering foreign direct investment in Ireland.
These
are offered by IDA Ireland, Ireland’s inward investment promotion agency, to both new and existing clients.
Ireland’s industrial policy has been firmly focused on attracting and retaining FDI for the last fifty years. Given the changing landscape and increased focus by governments and media on taxes, tax reputation is becoming a more important factor in winning FDI projects. As part of Budget 2014, the Government published a new international tax strategy statement which sets out Ireland’s objectives and commitments in relation to these
issues. Minister Noonan stated that he wants “Ireland to play fair” but also to “play to win”. Therefore we can expect that the Irish tax regime will continue to be competitive in the future.
The Irish Government’s steadfast commitment to positioning Ireland as a “knowledge economy” through the promotion of research and development activities and high value manufacturing, has paid dividends and has been fundamental in building Ireland’s reputation as the preferred location for many companies. In 2013, the Irish Government and industry partners announced a €300 million investment in seven new, large-scale, world class research centres aimed at further enhancing the performance of Ireland’s research system.
Track record: Ireland has had a pro-business environment for multinationals since the 1950s. Over the years, Ireland’s growing reputation as a dominant location for FDI has resulted in the country evolving from basic manufacturing to facilitating companies in a number of sectors including financial services, life sciences, technology and media. Today US companies have greater FDI stock in Ireland than the BRIC nations combined.
Because of the long time presence of industry leaders in Ireland, new entrants are encouraged to invest in Ireland. Also, because of their prior positive experience existing companies
have
been encouraged to bring new projects to Ireland as they are confident that Ireland will deliver. According to the IDA, 93% of overseas companies rate their investments in Ireland as a success.