Extract B: Corporate taxation and investment in Ireland

Ireland has long relied on attractive fiscal policies to draw foreign direct investment (FDI). However, the republic is transitioning to the OECD's Pillar Two global minimum tax framework. This framework imposes a 15% minimum effective tax rate on multinational enterprises (MNEs) with annual global revenues exceeding €750 million.

Historically, Ireland has offered a highly competitive headline corporation tax rate of 12.5% to entice major international companies—such as Apple, Google, Pfizer, and Intel—to establish their European headquarters there. While this rate has been the cornerstone of Irish industrial policy, the actual effective rate paid by some massive firms has historically been even lower due to targeted research and development incentives. It is estimated that around 1,600 multinational groups operating in Ireland will be affected by the new top-up tax to meet the 15% floor.

MNEs play an outsized role in Ireland's highly open economy. They account for approximately 32% of domestic employment, contribute over 55% of the nation's total value added (GDP), and generate a significant portion of corporate income tax revenues. Analysts debate whether the loss of tax competitiveness will trigger corporate flight to other jurisdictions, or if Ireland's non-tax advantages, such as its English-speaking workforce, EU market access, and strong legal framework, will be enough to retain global investment.