Government 'not for turning' on corporate tax

FOREIGN INVESTMENT:IRELAND'S CORPORATION tax rate is not up for negotiation, Minister for Enterprise Batt O'Keeffe said yesterday.

In a statement from his department, Mr O’Keeffe described the country’s 12.5 per cent rate as “a vital draw for foreign direct investment”, and said it was “an aspect of taxation on which the Government is not for turning”.

The statement came against the backdrop of reports that French and German officials have said the tax rate has emerged as a major point of contention with EU and IMF officials, who are said to be pressing Ireland to increase its corporate tax rate in return for an aid package.

The American Chamber of Commerce of Ireland was quick to support the Minister, with the president of the chamber, Lionel Alexander, saying that “Ireland’s corporate tax policy has attracted leading multinational companies to Ireland and created hundreds of thousands of jobs that would otherwise have been lost not just to Ireland but to the EU as a whole”.

Employers’ body Ibec also welcomed the Minister’s statement, with its director general Danny McCoy saying any change in the corporate tax regime would be “counterproductive”. Higher rates would mean “less revenue for the State as investment and jobs have the potential to move to countries outside the EU”.

He said “companies do not have to locate in the EU to service European markets. Uncertainty about corporate tax policy in the EU will simply drive investment to more business-friendly locations”.