More than 100,000 high-value foreign direct investment (FDI) jobs are at risk if Ireland loses control of its 12.5pc corporate tax rate, according to the representative group for the main accountancy bodies in Ireland.
n an impassioned consultation submission to the Department of Finance, the Consultative Committee of Accountancy Bodies – Ireland (CCAB-I) said there was “no clear solution to the dilemma facing Ireland” and that the country will suffer “substantial” economic and social damage if a global minimum tax is agreed and implemented.
The CCAB-I’s grim assessment of a G20 plan to set worldwide corporate taxes to at least 15pc lays out a nightmare scenario for the Irish Government, which will soon have to decide whether to go along with other countries in supporting proposals to reform the way the world’s biggest companies are taxed.
The document warns that Ireland is on the verge of losing its tax sovereignty and “will be at the mercy of the political objectives of large countries” such as Germany, France and the US.
“If an employer threatens to pull 100 jobs out of Ireland, the Irish public expects the Government to do all in its power to fight to retain those jobs in Ireland,” the submission said.
“On this occasion 100,000 established high-value jobs are at risk along with future job creation opportunities.”
It argues that a global minimum tax would “damage Ireland’s ability to win FDI investment and risks the flight of established FDI investment” once the State’s tax advantage disappears, contradicting the IDA’s claims that a well-educated, English-speaking workforce is key to Ireland’s attractiveness for FDI.
However, the document also points out that Ireland’s international reputation would be damaged if it stayed outside the global framework.
“It is regrettable that Ireland must take an opposing position to an aspect of international tax reform, but make no mistake about it, Ireland will incur substantial economic damage in the form of lost jobs and lost tax revenue if [the proposals are] agreed and internationally implemented,” it said.
The CCAB-I’s analysis calculated how many jobs would be lost if Irish employment at US multinationals alone were at the EU average, finding that 100,000 of 135,000 positions were at risk.
Overall FDI-backed employment in Ireland is nearly 400,000 jobs, or 17pc of the workforce, according to the Central Statistics Office.
Ireland is one of five holdouts to the accord being drafted by the Paris-based Organisation for Economic Cooperation and Development (OECD) to reallocate taxing rights on the largest multinationals and sets a 15pc global minimum rate.
A meeting of the 140 countries taking part in the talks is set for October 8, with the world’s 20 leading economies set to seal the deal at the end of the month.
Finance Minister Paschal Donohoe has consistently said the OECD reforms, which would also discourage big digital firms such as Google, Amazon and Facebook from booking profits in Ireland, would cost Ireland only €2bn in lost taxes per year.
The Irish Fiscal Advisory Council and the Central Bank have warned that the Government’s budget planning is vulnerable to loss of corporate tax revenue, which now accounts for 20pc of Exchequer receipts.