American corporations increase Ireland’s GDP
American corporations are making a significant contribution to Ireland’s economic growth. According to official data, 973 U.S. companies operate in Ireland. They view Ireland as a reliable business location, which contributes to its GDP growth.
However, the active presence of American multinational companies in Ireland is causing concern in the US. The White House administration has expressed dissatisfaction with the fact that a significant portion of profits are leaving the U.S. Authorities have called for some business operations to return to the United States, citing national security concerns. Ireland and other countries have access to the intellectual property of leading American companies. Commerce Secretary Howard Luttinik states that this reduces the US’s capabilities. Consequently, the US will be unable to maintain its leading position on the world stage.
This primarily affects technology and pharmaceutical companies, including Apple, Microsoft, and Pfizer. The latter are making efforts to retain intellectual property in Ireland. They are doing so by taking advantage of the peculiarities of the local tax system. For instance, the European Commission reported that Apple’s effective income tax rate in Ireland was less than 1% in 2014.
Ireland’s efforts to attract business
The country actively seeks to attract international companies, viewing them as a key tool for GDP growth. This policy has been in place since the 1980s. At that time, the country’s economy needed an influx of capital after a serious crisis. During that period, Ireland experienced rising unemployment and emigration.
Ireland’s dual strategy has become a key incentive for foreign companies to establish a presence in the country. The strategy was based on the following aspects:
1. The possibility of transferring intellectual property between subsidiaries.
2. Subsidiaries can be located in different countries.
3. The provision of tax incentives and favorable business conditions.
Many multinational corporations saw this strategy as an opportunity to avoid high taxes. An additional advantage was Ireland’s accession to the European Union, which strengthened its position in the international arena. Consequently, Ireland demonstrated dynamic economic growth, surpassing its neighbors in terms of GDP.
Nevertheless, the international community criticized this dual strategy. In response, Ireland revised its tax code and increased the income tax rate to 15%. Despite the tightening of conditions, the country continues to offer businesses other incentives. These include a flexible budget model and tax breaks that reduce operating costs.
Ireland remains attractive to American companies. They see Ireland as an opportunity to enter the European market. Moreover, the state provides a skilled workforce. This enables companies to expand their operations to another continent without relocating. These factors make Ireland a priority location for expanding international businesses.
