Irish government tax haul increases as economy continues to grow

Pasted Graphic

Ireland’s business-friendly tax regime has drawn legions of multinational companies to the country, boosting tax revenues and prompting political attacks from Donald Trump and Europe. Leo Varadkar’s government has reported a record €50.7bn tax haul for 2017, taking it within touching distance of a balanced budget in 2018 for the first time in more than a decade. Corporation tax revenues have practically doubled since 2015. The data reflect increased corporate profitability but also the transfer of multinational assets to Ireland to benefit from its low 12.5 per cent corporate tax rate. Amid an international outcry against aggressive corporate tax avoidance globally, such transfers have led to criticism of Ireland and information and communications technology groups (ICT) such as Apple that use the country as a European hub. €8.2bn Corporation tax receipts last year, compromising 16% of tax revenues Tax payments by individual companies are not made public. But Tim Cook, Apple’s chief executive, said it was “the largest taxpayer in Ireland” when Brussels ruled in 2016 that its Irish tax scheme, since changed, constituted a form of illegal state aid. Ireland and Apple rejected such findings and have appealed against the ruling. Mr Varadkar defended his country when he was harangued over tax after he addressed the European Parliament in Strasbourg this month. “Ireland is not a tax haven. We don’t want to be a tax haven and we certainly don’t want to be seen or perceived as a tax haven, and we have no interest in fact in a race to the bottom,” Mr Varadkar said. Ireland is already worried that Brexit could inflict severe economic damage. Paschal Donohoe, Ireland’s finance minister, has said Dublin’s tax system will continue to be competitive “even against the context of changes being made in the US”. He has also said Dublin expects corporate tax revenues will be sustainable until 2020 at least, citing independent advice.

Irish economy surges to double -digit growth

The figures show gross national product, which strips out the effects of multinational profit flows, jumped by 11.9 per cent on a quarterly basis.
Growth in the Irish economy has again confounded expectations, growing by 10.5 per cent year on year in the third quarter of 2017.
The latest quarterly national accounts show gross domestic product (GDP) accelerated by 4.2 per cent in the third quarter alone amid a pick-up in personal consumption and further growth in exports. This was nearly eight times the growth rate recorded in the euro zone as a whole.
The figures also show that gross national product (GNP), which strips out the effects of multinational profit flows, jumped by 11.9 per cent in the quarter.
Central Statistics Office (CSO) said large imports of intellectual property products by multinationals and aircraft related to the leasing sector, which have distorted figures in the past, were absent from the third-quarter data.
It said the growth in GDP was driven largely by a strong performance in the manufacturing sector, which expanded by 5.1 per cent, and in the information and communication sector, which accelerated by 5.8 per cent
Personal consumption, a key component of domestic demand, rose by 1.9 per cent in the quarter, while exports of goods and services grew by 4.4 per cent.
The CSO noted that a reduction in service imports (-9.7 per cent) was driven partly by reductions in imports of royalties – coupled with increases in royalty exports. This was linked to the growing levels of intellectual property products located here, it added.
The balance of payments current account, a measure of Ireland’s economic flows with the rest of the world, recorded a surplus of €14.5 billion.
The 4.2 per cent GDP expansion in the third quarter followed a revised 2.7 per cent rise in the second quarter and a 3.4 per cent contraction in the first quarter.
The agency has launched a new measure of national income modified gross national income or GNI* – which removes the volatility associated with multinationals.
A sub-index of that new measure modified total domestic demand – rose by 2.9 per cent in the third quarter, which the agency highlighted as a more accurate measure of the pick-up in domestic activity.
KBC bank said even allowing for some correction in the final quarter of the year, it now seems that for 2017 as a whole, GDP growth would be in region of 6.5 per cent, significantly ahead of the Department of Finance’s projection of 5.1 per cent.

Irish Sovereign Bond rate reflects strong economy

Ireland sells €750 million of its bond maturing in 2022 by auction

12 May 2016 – The National Treasury Management Agency (NTMA) has today completed an auction of €750 million of the benchmark 0.8% Treasury Bond 2022, at a yield of 0.157%.

Total bids received amounted to €1,945 million which was 2.6 times the amount on offer.

Irelands economy continues to grow

March 16, 2016 Irish EconomyNews

  • GDP expected to grow at approximately 4.8 per cent in 2016
  • Initial forecasts for 2017 indicate that GDP will grow by 4.1 per cent
  • Unemployment is expected to fall below 9 per cent by the end of 2016 and under 8 per cent by the end of 2017
Today, 16 March 2016, the ESRI published its latest Quarterly Economic Commentary, predicting continued economic growth and declining unemployment in 2016 and 2017. Following growth of 7.8 per cent in 2015, Gross Domestic Product (GDP) is forecast to grow by approximately 4.8 per cent in 2016 and 4.1 per cent in 2017.
The headline rate of unemployment is expected to fall to 8.7 per cent by the end of 2016 and below 7.5 per cent by the end of 2017.
GNP, which grew by 5 per cent in 2015, is expected to increase by 4.7 per cent in 2016 and 4.3 per cent in 2017.
Commenting on the report, QEC author David Duffy (ESRI) stated, “Despite a growing level of uncertainty in global economic conditions, growth in productivity and employment in Ireland suggests robust economic growth. The last two years have seen domestic sources of growth increase in relevance, a trend that seems likely to continue throughout 2016 and 2017.”
Co-editor Kieran McQuinn (ESRI) added, “Given the expected increases in personal consumption and investment in 2016, we expect the Irish economy to be quite near to its potential level by the end of 2016. In 2017, we feel that the economy will grow marginally stronger than its potential growth rate at 4 per cent.”

Ireland and Innovation

Ireland ranked as the most globalised nation in the EU – 3rd in the world in new Ernst & Young survey.

Ireland was recently placed third as the most globalised nation on the planet in terms of GDP. The study was conducted by Ernst & Young in its annual globalization index which was launched last week at the Davos convention. The study also revealed Ireland’s capability of staying in that spot until 2015 if the nation persists in maintaining its current capital and trade growth.
The index takes into account five measurements to ascertain a nation’s particular global ranking namely:

  • - It’s willingness to trade globally.
  • - Worldwide capital movements.
  • - Worldwide technology exchange.
  • - Worldwide labour movements.
  • - Willingness to merge cultures.
The report was created with the help of the EIU (Economist Intelligence Unit) which also revealed that Ireland came in second in regards to its economy in culture. Currently, the country shares its third place rank with Singapore in regards to its financial movements.
From back as far as 1995, Ireland has held its own as one of the top three globalised nations of the world. The country has even raised this bar higher by rising 1.21 points above the standard global average which is 0.70 points. However, in terms of trade, Ireland ranks sixth but it holds the top spot in the ease of its trading practices.
The country holds these accolades due to three factors namely its high yielding capital, financial and cultural integration practices. Its rise in the rankings is attributed to the increase in its FDI stocks and capital flow which increased an impressive 9% in terms of GDP. The country also took steps in improving its broadband service and the number of subscriptions, but the country might have to increase those efforts if it wishes to jump from 22nd place in terms of technology.
Even though Ireland is still reeling from the recession that hit it recently, according to some studies, it still manages to hold its own with other large economies of the world. The presence of the International Financial Services Centre (IFSC) in Dublin as well as the ‘Silicon Docks’ has also contributed in increasing Ireland’s chances in terms of capital movement and finance.
Managing partner at Ernst & Young Ireland, Mike McKerr believes the country is able to sustain this hold due to the vast number of multinational firms located there. He also opined that Ireland faces some tough competition from Switzerland, the Netherlands and UK in terms of attracting company formation. Failure to keep abreast of these three powerhouses can result in a lower ranking in the future. For this to be possible, the nation needs to think of innovative ways to set itself apart from its competitors such as improving their tax offering and filling any skill shortages.