Dublin -- “Double Irish?” No thanks, say the entrepreneurs and geeks gathered in Dublin for the annual Web Summit.
Global tech giants have been moving jobs and cycling profits through Ireland for decades, taking advantage of a low, flat tax rate and an educated, English-speaking population to turn Ireland into the so-called "Celtic Tiger" that boasts offices of 1,100 multinational tech companies, including the likes of Google, Apple, Facebook, Intel and Twitter.
But now that Ireland has committed to phasing out one key tax loophole -- the so-called "double Irish" tax scheme that has saved tech companies billions, it's out to show that it's more than the Cayman Islands with Guinness. Entrepreneurs and mid-sized business owners say what really makes Ireland great for business isn't changing: the low 12.5 percent flat tax, incentives to invest in research and development, and access to a critical mass of skilled, multilingual workers who are free to move around the Eurozone.
“We were never concerned or fixated on the ‘double Irish’ tax structure,” Jock Percy, CEO of Perseus Telecom, told IBTimes.com. “What we do like is a low, flat corporate tax rate, which means a low cost of compliance because we’re not trying to manipulate our profit levels.”
“We just want to make profits, pay tax, and not be concerned with the structure,” he added.
Perseus Telecom was one of eight companies announcing a total of 400 new positions in Ireland on Wednesday by either expanding existing operations or opening new European headquarters in this country of 4 million. The announcement was significant for its symbolism: Facing the end of the infamous tax loophole, Ireland wants to show that it can retain jobs and expand a tech economy wounded by the 2008 recession, even when the “double Irish” goes away.
Another bit of symbolism is the Web Summit itself. Launched four years ago amid the wreckage of downturn, the Summit is welcoming 22,000 entrepreneurs and tech executives of all stripes, up from 10,000 last year and 85 percent from overseas. Prime Minister (or Taoiseach, as the office is known locally) Enda Kenny rang the NASDAQ bell for the second year at Web Summit, and while he admitted he’s not a techie (his staff writes his tweets), he said the "double Irish" isn’t the reason businesses locate here.
“We have no reason to be fearful,” he told the Irish Independent. “When you strip everything away the main essentials to doing business are here and we can meet the challenges.”
That view was shared by Adam Bain, president of global revenue at Twitter. "I don't see why that would affect our investment here," he told the Independent. "We're going to make a very concerted effort to continue to invest here and to grow out our team here, which is world class.”
But that’s not a universally held view. A day earlier, former Apple CEO John Sculley, who moved Apple’s European operations to Ireland in the late '80s, said Ireland risks losing a bit of its “edge.” “There is a lot of talent in Ireland, so I don’t think it will be an insurmountable problem, but it will take the edge off, if tax advantages do go away,” he said.
The so-called "double Irish" allowed tech companies to shelter royalty payments for intellectual property by shifting them to a separate Irish subsidiary located in a tax haven like the Cayman Islands or Bermuda, allowing them to effectively exploit their intellectual property without paying taxes. But among smaller companies, the existence or nonexistence of the “double Irish” has little bearing on their decision to locate here.
“The ‘double Irish’ has no relevance to us; its access to the people with the language skills for Europe and Asia and the educated population and talent here,” said Jeffrey J, Laue, CEO of N3 Results, an Atlanta-based digital marketing firm that is moving 100 jobs to Dublin.
“The flat tax is secondary, not primary, to us,” he said.
If it was just the low tax rate, there are plenty of other options. “We could have chosen the Caymans or Bermuda, but we're not interested,” said Percy, who is opening a 25-employee office in Galway to be close to the National University of Ireland campus, known for its engineering graduates. “We’ll take the low corporate tax rate and in return we expect quality services, that the power stays on, that the educational system is high-quality."