Opening statement to the Oireachtas Finance Committee on EU State Aid Investigation

  • Release Date: 07/02/2017
Opening Statement presented  to the Oireachtas Finance Committee on EU State Aid Investigation

 7 February 2017
 
Thank you very much Chairman for your invitation to appear before you today - the Chamber is grateful for this opportunity to meet with you and the members of the Committee.
 
I am joined this afternoon by my colleague Brian Cotter, the Chamber’s Director of Public Affairs.
 
The American Chamber of Commerce Ireland is an Irish, non-partisan membership organisation. Our membership consists of the Irish operations of US multinational companies and Irish companies that have operations in the United States of America. We are a completely independent, stand-alone organisation resourced by our membership in Ireland. Our role is to be the voice of our total membership and not for any individual member company so our advocacy work is focussed on issues relevant to the wide spectrum of our membership and not on individual companies. We do not advocate for individual companies nor do we make public comment about them.
 
Our vision is that Ireland will remain the global location of choice for US business investment.
 
Chairman in your letter of invitation you asked us to engage with your Committee on the EU State Aid investigation into alleged tax preferential rulings and the wider issue of corporation tax in a global context. Your invitation is timely. We are concerned that these issues can be used to paint a highly inaccurate picture of the nature of US business investment in Ireland - in the current climate, with challenges including Brexit and a changing world order for global trade, it is vitally important that every opportunity is taken to put on the record the real nature of this investment, how it has been to the benefit of both Ireland and the United States and the role played by corporation tax policy.
 
I am acutely conscious of the need not to make any specific comment on the open legal proceedings regarding the EU Commission Ruling in relation to the Irish Revenue Commissioners interactions with Apple and the allegation of preferential State Aid but I would like to make some general points:
 
  • The Chamber fully supports the Government’s decision to appeal the EU Commission’s ruling

  • The Chamber believes that Ireland’s membership of the European Union has been central to our country’s social and economic development and critically important in retaining existing and attracting future US inward investment. The EU and the US are the world’s largest trading partners - we believe that every effort should be made to ensure the EU remains a location where US business can continue to invest with certainty. That is why we believe Ireland or any other EU member state simply cannot afford to have its tax policy and administration second-guessed in a retrospective fashion - businesses cannot make investment decisions in such an environment.

  • Ireland is fortunate to have a robust and independent Revenue authority that is recognised as operating to the highest international standards. It implements a rules-based tax code legislated for in a transparent manner by the Oireachtas. 

  • Any attempt to undermine the independence of our Revenue authority and second-guess how it does its work must be challenged. Any attempt to undermine the necessary process for taxpayers including businesses to seek clarification from the Revenue authority on the application of the law must be challenged as a retrograde step that undermines the global move by all leading Revenue authorities to a cooperative tax-compliance model. The suggestion from a Commission spokesperson that "…under EU rules if you want legal certainty then you need a Commission decision" does not help the case for investing in the EU.

 
Chairman, why do we believe this issue is so fundamentally important to Ireland? There are 150,000 very compelling reasons. Because that is the number of highly talented people who right now are working across Ireland for US companies from Wexford to Ringaskiddy to Shannon to Letterkenny - and their jobs support another 100,000 jobs country wide. Anybody who has visited these company locations cannot but be impressed by the passion and innovation of this talented workforce and the pride they take in what they do. And that pride is truly justified because what they are doing is producing products and services at the very cutting edge of global technologies that are saving lives and enhancing how people work and live around the world. Commentary about the nature of US business investment in Ireland and its substance is not credible if it does not reflect the contribution and performance of these people.
 
Four out of every five medical stents used around the world are created in Ireland, one out of every 2 hospital ventilators sustaining life globally are made in Ireland and 1 out of every three sets of contact lenses are created here. Because we are serving global market places we have created a global talent pool that has enriched our country, our respect for each and every individual, for diversity and inclusion. It is remarkable that a country that for so many decades saw its people forced to emigrate as economic refugees is now a place where people from all over the world want to come to live and build their careers.
 
 
It is worth noting that nearly all the Irish operations of US companies here are led by Irish men and women - many of whom go on to global roles with their companies. And what kind of culture have these Irish men and women built with their teams? It is a culture defined by:
  • Excellence - seeking to provide solutions that are global game-changers.

  • A continuous proven track record of world-class quality delivery to customers across Europe, Middle East, Africa, Asia and Globally.

  • A strong focus on regulatory compliance - from EU and US regulators such as the FDA where Ireland has a stellar record to the Irish Revenue Commissioners where the tax compliance levels of multinational businesses stands at 98%

  • A passion for diversity and inclusion - by way of example these companies commit significant time and resources to encourage greater female workplace participation and leadership and the pursuit of STEM subjects by girls at school

  • A commitment to their community - the Irish operations of US companies support the donation by their people of over 600,000 volunteer hours to over 7,000 community projects throughout Ireland each year

 
It is also very important to put on the record that the economic relationship between Ireland and the United States is very much a two way relationship - investing in Ireland has been good for US business and for the US economy. Over 200 Irish companies have created jobs at over 2,600 locations in all 50 US States and their operations generate US sales of over $90bn annually. The US leadership of the companies that have Irish operations consistently state how their Irish operations are critical to their global success - these companies are called multinationals because they seek to serve multinational markets and they need to have operations in their major markets - not least the European Union.
 
While it is not the only reason for our success, Ireland’s competitive corporation policy is a very important one. It was established six decades ago, before the establishment of the forerunner to the European Union, and it has been implemented consistently since its introduction. On its introduction Ireland was a poor, isolated country on the periphery of Europe. Visionaries like the late TK Whitaker realised that if we had any hope of creating a standard of living to sustain future generations we would need to attract inward investment and we would need to export - to do this we cast aside failed policies of isolationism and introduced pro-enterprise policies such as low corporate tax rates. The reason why this policy has worked is because it is implemented with transparency and certainty.
 
 
There is a widespread consensus that the basis for taxing the international operations of companies has not kept pace with the evolution of the global economy, the emergence of new industries and business transformation. In some cases global tax protocols were almost 100 years out of date – and there has been an understandable public frustration surrounding the operation of the international tax code.
 
The need to bring things up to date gave rise to the OECD’s Base Erosion and Profit Shifting or BEPS initiative. Ireland has been a central participant in this initiative  - in her evidence to this Committee Commissioner Vestager said “….I very much admire, (is) the fact that Ireland is very much leading when it comes to the implementation of the OECD work to make a more global tax community.”
 
And not only is Ireland’s taxation regime competitive, by any global standard it is also highly transparent and consistent.
 
Ireland holds taxation agreements with 72 other countries and over 20 Tax Information Exchange Agreements. These agreements provide for the cross-border sharing of information, ensuring greater levels of compliance.
 
In conclusion Chairman, Ireland has successfully transformed its economy thanks to key pillars including the certainty, transparency and universal applicability to all firms of our tax code. That certainty has helped Ireland compete and that track record has created an investment relationship with the US that is remarkably resilient. For example, in the five very tough years for Ireland from 2008 to 2012, US business investment in Ireland exceeded the previous 60 years. That is down to our hard-earned reputation for certainty and to the innovation and talent of our people. In the current very competitive and challenging global environment for inward investment it is vital that we protect and defend this hard-earned reputation.
 
Thank you Chairman