Sir, – Minister for Finance Paschal Donohoe makes a critical point in his observations on the possible introduction of a relatively high minimum corporate tax rate ("Donohoe expresses reservations about global minimum corporate tax rate", Business News, April 22nd). The corporate tax rate is only one of the factors which businesses take into account in deciding on the location of major investment projects. If tax were the only consideration, higher-tax countries could not compete with us and we in turn would always lose out to countries where the corporate tax rate is zero.
I have always seen low corporate tax rates as one of the tools available to smaller countries to part-compensate for certain natural and immutable disadvantages. A small country does not have a large domestic market, private or public sector, for the output of factories located there. A small country which is an island clinging on to the edge of Europe suffers from the further disadvantage that it is expensive and time-consuming to import raw materials from and to export finished goods to larger markets.
All of this was true even before the recent complications attending the UK landbridge to Europe. If I may adapt Mr Donohoe’s words, these are the real, material and persistent disadvantages suffered by smaller countries.
All of these disadvantages result in quantifiable costs. Corporate income tax is a cost for business and the relatively low rate which has long been a feature of our industrial development strategy offers some compensation for the other higher costs of doing business in and from Ireland. – Yours, etc,
PAT O’BRIEN,
Crossmolina ,
Co Mayo.