Finance (No.2) Bill 2013

Financial services

Deirdre Power, Partner, Deloitte

We welcome the comments made by the Minister in the Budget, reaffirming the Government’s on-going commitment to the 12.5% corporate tax rate and to continuing to support foreign direct investment into Ireland. We also acknowledge the work done by the Minister in previous Finance Acts to introduce new measures and refine existing legislation to further enhance Ireland’s competitiveness when it comes to attracting investment in the financial services sector. That said, however, it is vitally important that we continue to innovate, introduce new financial products and incentivise businesses not only to locate here but to retain what they have here.

Bar the change to the foreign tax credits for lessors there is a notable absence in this year’s Finance Bill of any major change that might enhance the Financial Services environment. By way of contrast, the UK , for example, has been very forthright in its desire to ensure that financial services is a key plank of its future development by introducing new products and an enhanced framework to assist in the development of financial services companies. This is highlighted (amongst other things) in the “UK Investment Management Strategy” issued by HM Treasury in March 2013, where they outline the specific steps/initiatives they are committed to in order to rebuild their share of the global investment management business. Included in that strategy is a focus on tax changes which the UK have already started to implement in the last few months. While it is fully recognised that Ireland, like other countries, is under the microscope from an international tax perspective (and that clearly poses challenges), “doing nothing” will certainly not attract business here. Inaction will cause a reaction.

Certainly making no changes is far better than making changes that have a negative tone. However it is important that each year there is something new and impactful in the Finance Bill for financial services. FS companies operate on a global basis and are constantly monitoring where the best opportunities are for building out their businesses. Having a location that provides a positive, dynamic, innovative and appropriate framework is key. There is something very powerful in being able to market Ireland globally where there are positive changes in our tax framework – all in keeping with the Ministers focus on rate, reputation and regime. Hopefully, committee stage amendments may have a positive surprise or two in store for the FS industry!

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