Tax Incentives

The core IDA tax incentive principle has always been that Ireland should offer any foreign investor the longest possible time horizon. To attract foreign direct investment, the Irish government has committed to a 20-year tax benefit package. For many years , Ireland had a maximum of 10% corporate tax rate for manufacturing and data processing companies that are allowed to keep that benefit until 2010. However, beginning in 2003, a new tax rate of 12.5% will be introduced for all companies. Despite the low tax rate, corporations in Ireland contribute about 12% of the tax take, as compared with 5% in other European countries that have higher corporate tax structures.

With a longer time horizon, the investors can forecast their tax liability with confidence and can estimate net return on their Irish investment some 10 or 20 years into the future. Furthermore, reinvestment and expansion can be planned with greater assurance. The productive base of the economy has been transformed by long- term investments. This is part of the reason that about 23% of all new mobile investment into Europe locates in Ireland, which has only 1% of the EU population.