Europe's Poorest Country? Now the 'Headquarters of Europe'... Sitting on 55 Trillion Won from Corporate Tax

Simon Harris, Prime Minister of Ireland, is answering questions from the press after a meeting with U.S. President Joe Biden outside the White House in Washington DC on the 9th of last month. Photo by Yonhap News

원본보기 아이콘

Once one of the poorest countries in Europe, Ireland is now enjoying an unprecedented fiscal surplus through corporate tax revenue.

On the 22nd (local time), the US Wall Street Journal (WSJ) reported that Ireland's expected corporate tax revenue this year will reach 37.5 billion euros (approximately 55 trillion won). This is more than eight times the 4.6 billion euros (about 7 trillion won) collected ten years ago. When the total corporate tax revenue is divided by the population, it amounts to about 7,000 euros (approximately 10.25 million won) per capita.

Although Ireland is currently experiencing an economic boom, in 1840 it suffered great hardship due to the "Potato Famine," which forced more than 4 million of its citizens, the majority of the population, to emigrate. Additionally, during the 2008 global financial crisis, the country was pushed to the brink of national bankruptcy and lowered its corporate tax rate to 12.5%. This rate is about one-third of France's 33% and significantly lower than the 20% range of the United States and the United Kingdom.

Tax avoidance crackdowns by neighboring countries have also worked in Ireland's favor. Over the past decade, the US and the European Union (EU) have closely monitored global companies' offshore tax avoidance. As a result, companies can no longer avoid corporate taxes through tax havens like the Cayman Islands. Consequently, Apple, Microsoft, Alphabet (Google's parent company), Pfizer, and others have relocated their European headquarters to Ireland, where tax rates are relatively low.

With a robust budget generated from corporate taxes, the Irish government is actively investing in various infrastructure projects. Recently, about 2.2 billion euros (approximately 3.2 trillion won) have been allocated to begin construction of a children's hospital in the capital, Dublin. Additionally, significant funds are being spent on flood prevention facilities and wind power plants. Regarding this, WSJ explained, "Ireland was once known for mass emigration and nearly went bankrupt during the financial crisis. Now, it is bringing in workers to build various facilities. This is a stroke of luck unimaginable just one generation ago."

Meanwhile, there have been concerns that "Ireland's reliance on corporate tax revenue is too high, making its stability questionable." In response, Pearse O’Rourke, head of the Irish Foreign Direct Investment Agency (IDA), stated, "It took over 30 years for US corporate tax policy to change in the past, but nothing significant happened during that time."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.