Ireland's low corporation tax rate is not the main reason technology companies choose to locate here, a representative body for the technology industry claimed this week. However, if it was raised, future investments could be in doubt. John Collinsreports.
"It is absolutely imperative that the tax structure stays as it is," said Lionel Alexander, chairman of ICT Ireland and vice-president of Hewlett-Packard's Irish manufacturing operations.
The Government is strongly contesting proposals to harmonise corporation tax rates across the EU, which would see a significant increase in Ireland's current rate of 12.5 per cent.
Mr Alexander's comments were made at the launch of a report designed to encourage new investment in Ireland by technology firms.
He said the publication was essential to ensure "decision-makers in corporate headquarters are aware of the positive indicators in the Irish economy".
ICT Ireland says that, despite the low rate, Ireland raises 3.8 per cent of GDP through corporation tax compared to an EU average of 2.9 per cent.
The report says that other factors such as a skilled workforce, supportive government and a growing base of local research and development help make Ireland an attractive location.
"There are regions of the world which offer a zero tax rate but we haven't moved all of our investments there," said Mr Alexander.
The publication notes that 83,000 people now work in the information and communication technology (ICT) sector, which last year generated exports of €30 billion - almost one-third of the national total.
Mr Alexander called on the Government to expand and reform the current scheme of research and development (R&D) tax credits in the forthcoming budget. Last year, 212 overseas firms invested more than €250,000 each in R&D in the Republic.
ICT Ireland also highlighted the fact that, despite reports about job losses in the sector, Nortel, Amazon, IBM, Gala, VM Ware and Blizzard, had all announced new investments in Ireland this year.
The report, entitled Why Ireland Should Be Your Location of Choice, features testimonials from top executives at companies that have already established significant bases in the Republic, including HP, Ericsson, IBM, Intel, Analog Devices, Dell, Google, Microsoft and Oracle.
