SanDisk didn't waste any time when it set up in Ireland in 2005, writes Arthur Beesley.

Californian tech firm SanDisk didn't waste any time when it set up in Ireland in April 2005. Within eight months, its main Irish unit had taken in revenues approaching $1 billion (€762 million) and booked profits of $105.95 million.

A maker of MP3 players and memory cards for digital cameras, SanDisk was expanding rapidly. Ireland became a crucial cog in its international network when it moved the headquarters of its European operation to Swords in north Dublin from the Netherlands.

SanDisk was not alone. Thanks in the main to the low corporate tax rate of 12.5 per cent and associated incentives, hundreds of US organisations have come here to do business. Many of those are very big employers - Intel, Google and Microsoft among them - but SanDisk's employment here is quite modest.

However, its Irish unit achieved significant financial scale in an instant. The Irish revenues amounted to almost half SanDisk's total for 2005 - $2.3 billion - and more than a quarter of its overall net profit - $386.4 million.

Big bucks indeed. To look after this important business, SanDisk didn't stint when it came to advisers and support services. The firm hired AIB as banker, recruited Ernst & Young as auditor and took legal advice from A&L Goodbody.

As for staff, well, SanDisk's arrival here didn't quite herald a jobs bonanza. The unit that earned the bulk of its revenues, SanDisk Manufacturing Ltd, had no direct employees in 2005. A subsidiary Irish undertaking called SanDisk International Ltd, which had sales of $474.6 million, employed an average of eight staff that year.

The firm has since expanded its Irish operation. At a press conference last April, which was attended by Minister of State for Enterprise Tony Killeen, SanDisk declared plans to recruit additional staff to its team in Swords, which then employed 12. The firm now employs 35 in Ireland.

SanDisk vice-president Ed Moro said then that tax "certainly was part of the consideration" in the decision to move the European headquarters to Ireland. However, tax "certainly was not the determining factor". Net cost of moving to Ireland: less than $500,000, according to Moro.

There was no attempt to play down the financial scale of SanDisk's Irish operation. Indeed, SanDisk said then that it would route more than $1 billion in revenues through its newly expanded Irish unit before the end of 2007. What the firm didn't say was that it came within a whisper of taking in such revenues in its first months here.

According to Hugh Connolly of SanDisk, the SanDisk Manufacturing unit is the holding company for production activities that the firm outsources to manufacturing groups in Asia. He says it is not the case that the company has no substance and says it was, in effect, staffed by employees of its SanDisk International subsidiary.

"It's no different to any other other holding company," says Connolly, who is general manager of SanDisk International. "It doesn't actually mean that staff have to be in the holding company. Most international companies have that kind of holding company structure."

Unlike many US groups here, SanDisk does not receive grant assistance from IDA Ireland. But its presence here follows specific policy and taxation measures to encourage international groups to expand their presence here.

In the Finance Act of 2003, for example, the Government put rules in place that significantly reduced the tax on the profit an Irish-based holding company would gain on the sale of a subsidiary.

This was followed by measures in the Finance Act of 2004, which introduced a tax credit for incremental expenditure on research and development. In the same package, the Government exempted transfers of intellectual property from stamp duty.

Such developments were well received by the market. The giant cereal-maker Kellogg was just one of numerous large groups to set up a European headquarters in Ireland.

"It's tax straightaway," says one individual who is very familiar with the thinking of big US multinationals. "The real attraction - after the Cayman Islands took such a hammering over Enron - is the transparency of the Irish system. The secrecy of the Cayman system would have brought difficulty post-9/11 and post-Enron."

Citing the fluctuation of taxation rates in the Netherlands and Switzerland, this person says Ireland also offers a greater level of certainty about the likely level of taxation than other European centres.

"There's hundreds of them and there's more and more coming all the time. People see the sovereign tax rate is not jumping around. And Ireland meets all compliance requirements."

For Ireland Inc, the arrival en masse of groups such as SanDisk has boosted domestic tax revenues in a big way and helped foster the full employment that is central to the continued economic boom.

Not that such groups welcome public exposure of their private business.

Within the past year, both Google and Microsoft moved to shield from public view the affairs of their biggest Irish units by re-registering them as companies with unlimited liabilities. Such companies have no obligation to file public accounts.

Thus SanDisk's latest filings in Ireland offer a rare insight into the way in which big money moves around behind closed doors in large organisations.