In a recent interview a senior economic adviser to Irish Taoiseach Simon Harris said that an exodus of Big Tech companies from Ireland could ‘wipe out’ the Irish economy and eclipse the impact of the 2008 banking crash.
Stephen Kinsella, a university professor turned Government adviser, issued the stark warning as jitters emerged about Ireland’s place as the world’s Big Tech capital. Citing the consequences of Microsoft’s exit from the Irish county of Limerick in 2009 — in which 4,000 jobs were lost overnight — Kinsella highlighted that Apple has 6,000 staff in County Cork alone, and that if it were to jump ship all those jobs would go too.
Aside from the employment implications, the Irish state’s coffers would also be heavily impacted. ‘Apple, Microsoft and Pfizer probably pay something like 60% of all corporation taxes in Ireland. That’s a huge amount of money,’ Kinsella claimed. ‘So to lose the top three biggest… basically wipes us out.’
He also provided an incisive analogy: if the Irish Government were a company, over 20% of sales would come from large US multinational corporations. As such, if the US pharmaceutical and technology sectors are not doing well then Ireland naturally follows suit.
This scenario may become a reality in the not-too-distant future as Pillar 2 — the OECD’s landmark global tax harmonization deal — is set to be implemented later this year. With that, Ireland’s corporate tax rate will increase from the current low rate of 12.5% to 15% on all companies with an annual turnover of €750 million, potentially ending the country’s competitive edge as a tax haven.
Ireland was instrumental in this arrangement getting over the finishing line after securing a commitment to remove the term ‘at least’ from the original text to prevent future corporate tax increases further down the line. But while 99% of companies operating in Ireland will continue to pay the 12.5% rate, around 1,600 multinationals — mainly US firms — will fall under the new harmonized figure.
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