12/10/23

IRELAND: Ireland To Use Its Huge Offshore Tax Business to Create A $100 Billion+ Investment Fund

As published on: themessenger.com, Thursday 12 October, 2023.

The sovereign fund could grow to $106 billion by 2035, thanks to profits from giant U.S. companies including Apple and Pfizer.

Ireland said Tuesday that it would invest a chunk of the billions of dollars it has banked by helping American multinationals reduce their tax bills.

Ireland's Minister of Finance Michael McGrath said in a speech that the country would create a new sovereign wealth fund stuffed with dollars made by helping companies including Apple and Pfizer funnel overseas profits through low-cost Irish subsidiaries.

The Ireland Future Fund will be funded with 4.3 billion euros ($4.5 billion) next year stemming from "windfall corporate tax receipts," McGrath said.

The sum is equivalent to 0.8% of the country's GDP, he said. Ireland will place that percentage of GDP into the new fund each year through 2035.

The Finance Ministry said the new sovereign wealth fund could grow to 100 billion euros ($106 billion) by 2035.

The creation of the fund largely means that giant technology and pharmaceutical multinationals are helping to bankroll the Irish state. The new fund "will help us to meet the costs of running the State in the future, and will make a contribution to the cost of healthcare, pensions, home care and much more," McGrath said in his speech to deliver his first budget as Minister of Finance.

He added said the fund would receive a "seeding" of 4 billion euros ($4.2 billion) already saved in a different government fund.

The money could eventually be used to cover the rising costs of healthcare, pensions and home care for the country's aging population. McGrath said that "age-related spending will be around €7-8 billion ($7.4 billion - $8.5 billion) higher by the end of this decade than it was at the start of the decade."

Ireland slashed its corporate tax rate to 12.5% from 40% starting in the late 1990's.

Labeled by many think tanks an offshore tax haven, the country was slammed in 2018 by a senior European Union official as a tax "black hole."

In the last eight years, its corporate tax receipts tripled to 22.6 billion euros ($24 billion) in 2022, resulting in a budget surplus of 8 billion euros ($8.5 billion), The Wall Street Journal reported Tuesday.

In 2022, there were 950 U.S. companies operating in Ireland, according to the American Chamber of Commerce' Ireland's branch in the country.

A report from the Irish Fiscal Advisory Council estimated that about a third of the country's corporate tax revenues from 2017 to 2021 came from just three companies.

Although the report did not name the companies, Brian Setser, a senior fellow at the Council on Foreign Relations, told the Journal Tuesday that tax records indicate the three companies are Apple, Microsoft and Pfizer. In 2020, Google said it would no longer use a fancy corporate tax loophole known as a "Double Irish-Dutch Sandwich" that allowed it to winnow its tax bills using entities in Ireland, the Netherland and low-cost Caribbean havens.

Tags

Ireland Investment Funds Offshore Tax