Address by the Minister for Foreign Affairs at the 30th Anniversary of AITI Qualification
An Roinn Gnóthaí Eachtracha
Department of Foreign Affairs
Preas Oifig, Teach Uibh Eachach, Faiche Stiabhna, Baile Átha Cliath 2
Press Office, Iveagh House, St Stephen’s Green, Dublin 2.
Tel: 353 -1- 478 0822 Fax: 353 -1- 478 5942 / 475 7476
Address by the Minister for Foreign Affairs, Mr. Micheál Martin, T.D.,
at the 30th Anniversary of AITI Qualification
Thursday 19 November 2009
President and members of the Irish Taxation Institute, Ladies and Gentlemen,
I am delighted to be here this evening at this very special event celebrating the 30th anniversary of the Institute’s AITI qualification.
Dónal de Buitléir
Of course, I am honoured to be here tonight to present one of the foremost of those same tax professionals, the incomparable Dr. Dónal de Buitléir, with his Honorary Fellowship. Dónal is one of the country’s most eminent and dedicated experts whose experience is drawn from both the public and private sectors.
Dónal was a rising star in the public service, becoming Assistant Secretary in the Revenue Commissioners with national responsibility for VAT Audit and Corporation Tax, before he left in 1989 to join AIB as the bank’s Head of Group Taxation.
Although Dónal spent 20 years working in the private sector, he remained a public servant in its truest sense. He generously devoted his time and considerable expertise to all of the various committees and review groups which he was invited either to lead or to take part in. He is a great example of the type of person we need at the heart of Irish life, someone who does not just pursue the elevation of their own career, but who also actively seeks to contribute to public life for the betterment of our society.
Dónal’s great ability is to always look outwards, to learn from the experience in other parts of the world, and to draw on the best examples of these experiences to the benefit of his own country.
His contribution to Irish public life has been enormous. Amongst the roles Donal has fulfilled were Chairman of the Business Regulation Forum a post he was appointed to when I was Minister for Enterprise Trade and Employment ,Chairman of the Civil Service Performance Verification Group, Chairman of the Citizens’ Information Board and Chairman of the Review Committee on Third Level Places. All these groups performed a key service on behalf of the State in areas that remain of critical importance to us today.
We are extremely grateful for his great dedication, and I am delighted to be here tonight to honour and recognise that contribution.
Ladies and Gentlemen
Tonight’s event comes at a time of enormous challenge as we seek to rebuild our economy and strengthen it for future generations. Taxation plays a key role in the Government’s management of the economy and that brings the work of the Institute and its members to the centre of the economic stage.
Since it’s inception over 40 years ago, the Irish Taxation Institute has worked with Revenue, Government, business leaders, other professionals and business representative groups and the general public to help in the development and administration of our tax system. The Institute has also been at the forefront in educating the pre-eminent tax professionals of Ireland, and that heritage is marked this evening by the celebration of the 30th anniversary of the Institute’s AITI qualification.
ITI, Taxation and Ireland’s economic development
We must not lose sight of the fact that, despite the current difficulties, the Irish economy has achieved a truly remarkable transition since this Institute produced its first qualified associate (AITI) thirty years ago.
Tax professionals, including the 3,700 or so qualified associates of your Institute, have played a significant part in this era of transition and strong economic growth:
· by helping business to manage the complexity of tax laws and drive forward commerce and investment;
· by recommending policies that minimize the tax burden and assist entrepreneurship; and
· by solving problems and opening doors for inward investment.
Attractive Location for FDI
Inward investment has, of course, been a key element in our economic success and, since the 1950s, successive Irish Governments have pursued a consistent strategy of maintaining a low tax burden on companies, in particular exporting and manufacturing companies, so as to support sustainable economic growth and social progress.
The Government remains absolutely committed to maintaining our 12.5 per cent rate of Corporation Tax. We have lost too many jobs in the past two years; but we are as determined as ever to retain the capacity to create new ones. Our tax regime is a key part of our capacity to do so.
A favourable tax regime is, of course, just one of the factors that make Ireland an attractive location for multinational companies. There are a range of other advantages that all contribute to encouraging multinational firms to locate and invest in Ireland including access to the European market, membership of the Euro, an English speaking population and good infrastructure. The quality of our education system has, of course, also been an absolutely key component in our success.
Current economic crisis and challenges
I don’t need to tell anyone here that, although we retain these underlying strengths in our economy, we are now in very challenging times. As we prepare for the Budget in three weeks time, the Government faces difficult choices but we are determined to make the hard decisions now for the future of our economy and of our country.
We have already taken decisive steps in the last year to address the key challenges to our economy and these have led to an improvement in international confidence in Ireland. In a recently published report, the EU Commission concluded that Ireland has taken effective action to address the fiscal deterioration and we must continue along that path.
The key priority in the Budget will be to stabilise the General Government Deficit at this year’s level. This requires an adjustment of €4 billion. It is imperative that this action be taken now. We need to inspire confidence, both internationally and domestically, that the deterioration in the public finances is being addressed and arrested.
We also need to prevent the debt level rising to unsustainable levels so that the cost of servicing that debt is contained.
Of course we have also recently seen the Report of the Commission on Taxation which provides a comprehensive examination of the Irish Taxation System and can greatly inform our tax policy. Given its longer-term strategic perspective and its focus on the future, the implementation of the many complex and often inter-related recommendations contained in the Report are likely to be phased in over a few years.
In the context of the forthcoming Budget, the Government is of the view that the bulk of corrective action must come from the expenditure side.
The Government has also focused on taking steps to ensure that Ireland has a fully functioning banking system so that businesses can access the credit they need to thrive and grow, by developing NAMA; we have looked to a model that has been successful in a number of countries.
While the Irish economy is projected to contract in 2010, we have seen an improvement from the forecasts contained in the April Supplementary Budget. The last year or so has been an exceptionally difficult one for us all, and significant challenges remain, but it is encouraging to see that the outlook for the global and Irish economy is now improving.
Vision of Ireland
This Government has a vision of Ireland as an Innovation Island which will attract a critical mass of companies – both Irish and international – at the forefront of innovation, researching and developing the products and services of tomorrow and providing well paid jobs for this and future generations. Last December, we mapped out the steps required to fulfil that vision in our Framework for Economic Renewal; Building Ireland’s Smart Economy
The plan aims to create a Smart Economy which will attract innovative companies by providing the best environment for turning ideas into products and services for sale. This will include a highly competitive tax regime, appropriate business supports, infrastructure and State agencies & institutions which are aligned to create competitive advantage for innovative businesses.
R&D Tax Credit and Intellectual Property Regimes
Our corporate tax regime has already evolved to support this vision and to encourage more “smart economy” activity.
The tax credit for research and development (R&D) was increased in the October 2008 Budget to 25 per cent and made repayable in certain circumstances. This tax credit is viewed by industry and the State agencies concerned as essential to the ongoing development of R&D activity in Ireland. We now have one of the most attractive tax regimes for R&D anywhere in the world.
We also realise that the tax regime needs to accommodate the acquisition as well as the creation of intangible assets. That is why we introduced in the Supplementary Budget in April a new scheme of tax relief for capital expenditure on intangible assets which will encourage companies to locate the ownership and management of IP in Ireland
The role of the Department of Foreign affairs in supporting economic growth
I am determined that Department of Foreign Affairs will play a full role in building the economic future of our country.
The network of Embassies and Consulates which Ireland has overseas has never been as big as that of other countries, but it has always punched above its weight. We have a relatively small number of diplomats but they work incredibly hard on behalf of Ireland.
Ask any Irish businessperson who has been trying to open up a new market and they will tell you about a diplomatic service which has developed the required local expertise and is eager to help.
We already work very closely with all the agencies that are promoting Ireland as a location for trade, investment and tourism. I have instructed our Missions abroad to further strengthen the use of their status and influence to advance our economic interests.
I have also held a series of consultative meetings which have brought together Government departments, state agencies and private sector representatives to see how we can make more strategic use of our network of missions to support Irish economic activity abroad.
My Department has been working closely with the Department of Finance and IDA to monitor the debate within the United States Administration on changes to the taxation of multi-national corporations, including the issue of deferral. This issue has been the subject of high-level contacts with the US side on the part of the Taoiseach, the Tánaiste and myself.
Ireland has an open and transparent tax system and has provided many U.S. companies competing globally a strong base in Europe. The Embassy in Washington, in close coordination with the IDA, is continuing a comprehensive programme of outreach with contacts in the Administration and Congress to ensure that the mutual benefits of our existing relationships with the U.S. and U.S. companies in Ireland are fully understood.
Changing International Tax Environment + Double taxation network
The current re-writing of tax and banking secrecy rules, in particular as a result of the London G20 summit in April, is leading to a fundamentally changed landscape in terms of international tax transparency.
In this regard, a large, comprehensive tax treaty network with other countries is of key importance, both in terms of Ireland’s international reputation as well as our competitiveness.
Our network of Embassies is supporting the work of Revenue and the Department of Finance to significantly increase Ireland’s network of Double Taxation Agreements, in particular with new and emerging economic partner countries in Europe, the Middle East and Asia.
In addition, the commitment of major financial centres such as Singapore and Hong Kong to sign up to OECD standards paves the way for Ireland to agree full Double Taxation Agreements with those jurisdictions.
We have now signed comprehensive Double Taxation Agreements with 55 countries. I am asking our Ambassadors to prioritise the signing of new Agreements as soon as Government approval is obtained, with a view to reaching our target of 60 Double Taxation Agreements over the next few months.
I believe that in the increasingly globalised environment in which we now operate these international agreements will support Ireland’s ability to grow and trade internationally.
As part of my commitment to ensuring that the Department plays a central role in contributing towards our economic recovery, we organised the Global Irish Economic Forum at Farmleigh in September.
The Forum provided the opportunity for the Irish Government to hear, from a truly global network of Irish business talents, a range of valuable ideas on how to address the economic challenges that confront us; and how to establish a new and more dynamic relationship between Ireland and its global community.
I was struck during, and since, the forum by the commitment and enthusiasm shown by the participants to play a role in Ireland’s future. It was also encouraging to hear so many prominent international business and cultural figures express such optimism about the future of Ireland, despite the present economic difficulties.
The purpose of the Forum was to allow the participants, who are leaders in their fields with international experience, to voice their concerns, their vision and their proposals for Ireland. The discussions were enthusiastic and often very frank in addressing the challenges facing our country but they generated real practical ideas.
A report on the Forum, which identifies a range of themes which emerged at the Forum along with a list of specific proposals and medium term objectives, is available on the home page of my Department’s website, www.dfa.ie. These proposals are now being taken forward by a new inter-Departmental Committee chaired by the Secretary General at the Department of Taoiseach.
Another significant outcome from the event is the creation of an invaluable network of highly successful business figures across the globe who now feel that they have a stake in delivering renewed economic growth in Ireland.
The Forum reinforced to me the importance of Ireland’s international linkages and the need for Ireland to continue to strengthen our relationships with our global partners.
Last month, we took a decisive step in that direction with the resounding vote by the Irish people in favour of ratifying the Lisbon treaty. The decision reaffirmed Ireland’s commitment to Europe and ensured that we will play our role, with our partners in the Union, in creating a prosperous and sustainable Europe which will be good for the Irish people and good for business.
I would like to thank your Institute for the positive interventions it made to the Lisbon debate by publicly dispelling some of the myths that had been created around the Treaty relating to our autonomy over our own tax affairs. The Institute made it clear that the original Treaty had not threatened our autonomy in this respect and furthermore that the guarantees achieved by the Irish Government in advance of the second Lisbon vote strengthened our ability to control our own system of taxation. The Institute also appeared before the Joint Oireachtas Committee to discuss Ireland’s future in Europe.
Anniversaries such as the one that you are marking here tonight provide us with an opportunity to reflect. It is a chance to review our progress, take stock of where we are and to look to where we are going.
Our country has been transformed in the last 30 years, and many people in this room, and their colleagues, have had their part to play in that transformation. Key to Ireland’s economic development was investment in infrastructure, industry, education and most importantly in people. The Irish people have always been known for their natural creativity and talent but they have now also earned a reputation for their experience, education and the ability to apply their skills in facing business challenges in an ever changing world.
We must continue to build on our capabilities, experience the hard earned gains of the last 30 years to plot a course for Ireland’s future as a smart, green economy.
It is a journey that we all must take together, so I would like to thank the Irish Taxation Institute for its constant willingness to step up and get involved in the debate about taxation, and I wish you every success in continuing to educate the tax professionals of the future.
19 November 2009