This week could be a significant week for FDI and Jobs in Ireland as the Trump administration is seeking a dramatic reduction in Corporation Tax to15% .
This 15% rate would be lower than the corporation tax rate being sought under plans developed by House Republican leaders and will drop the corporation tax rate from 35% to this new low of 15% .
This move will have implications for FDI from the USA in Ireland which last year saw almost 19,000 jobs created and a record 200,000 people employed by FDI companies .
The Trump administration overall tax changes may lead to US firms based in Ireland looking at the USA itself when considering future expansion plans
It is anticipated that the Administration will accelerate efforts to deliver a tax plan that will slash corporate tax rates and prioritising cuts in tax rates on personal income to close to 33% .
The implications of these developments for Ireland is a real concern,Ireland is suffering an acute skills shortage and income tax rates of over 50% make it extremely difficult to attract skilled professionals this is now resulting in wage inflation in many US firms and is impacting on their bottom line .If you include today’s expected announcement on corporation tax Ireland competitiveness is called into question.
For organisations such as the IDA these new developments along with Brexit present real challenges to their strategic planning .
The agency needs to look at having less reliance on US FDI and shift towards new booming economies in locations such as South East Asia .
The IDA have taken small steps in this direction with 19 new foreign direct investments coming from Japan (6) and China (5) and other less familiar locations ,more work is needed to shift the balance away from the US.
The Agency should open new bases in cities such as Yangon,Phnom Penh and Hanoi and needs to advise the Irish Government to address the skills shortage in Ireland by developing an integrated campaign to attract skilled workers to Ireland .
The failure of Ireland to attract UK companies to Dublin after Brexit is directly attributable to the regulation log-jam in Dublin and the Government must address this urgently before key decisions on European locations are made by British firms .
The IDA has set a ambitious target of 80,000 new jobs and 900 new investments by 2019 and these targets are achievable once the Agency and Government tilt it’s direction .
