Over the past year or so there's been one good economic story for Ireland that has sort of been lost amidst the reports on company closings, job losses, bank bailouts and government spending cuts. The little snippet of good news has been the number of company's that have relocated their headquarters to Ireland.
Today's Irish Times reports that United America Indemnity is moving its headquarters to Ireland from the Cayman Islands. I never heard of United America Indemnity before, but the Irish Times says the company had previously announced that it was moving its headquarters to Switzerland, but has now reconsidered. Can't be bad news, right?
UAI says they are moving here because "Ireland offers an attractive business environment, a highly educated and motivated professional workforce, a comprehensible legal system grounded in Common Law, a sophisticated regulatory environment, and an extensive global network of international treaties."
Last May accountancy firm Accenture announced that they were moving their headquarters here from Bermuda. Accenture said, "Ireland's corporate, legal and regulatory environment alongside its tax treaties with European Union member states, the United States and other countries around the world where the company does business was the reason for the shift."
At the time Ingersoll Rand announced that they were shifting their headquarters to Ireland from Bermuda they too cited the "legal and regulatory environment" as one of the decisive factors. There are a number of other companies that have made similar announcements and mentioned the same
So what's going on here?
Early last year President Obama announced that he was going to press for changes in American law that would put pressure on American companies operating out of tax havens. At the time there were fears here that Ireland would be listed as one of the tax havens, but that didn't transpire.
Last April the G20 nations unveiled an "internationally agreed tax standard," which Ireland has implemented. So, despite it's low corporate tax rate – 12.5% - the transparency of the Irish system means Ireland is not a tax haven. Ireland also is willing to share information with other jurisdictions, something that tax havens are loathe to do.
Ireland is simply the OECD country with the lowest corporate tax rate and we're part of the EU, which makes it an attractive place to have your headquarters. That's the "legal and regulatory environment" that these companies find so attractive.
That 12.5% may sound low, but 12.5% of income that you wouldn't have otherwise can add up to sums that make a big difference here. I don't see any potential risk to the country from this policy, which is one for which the government should be applauded.
Even though it leaves me feeling a bit uneasy knowing that these American companies are not paying tax in America as they probably should, if companies are going to relocate their headquarters to save on their tax bill I'm sure glad it's in Ireland rather than anywhere else.
No Irish Need Apply? Not anymore