For many years the blue economy in Ireland was restricted to the fishing and struggling shipping industries. When we looked out at the great blue we saw something which limited us – not anymore writes Jim Healy, Director with KPMG’s Marine Tax Practice.
Irish business leaders have now embraced our island-status and the country has become an attractive alternative for International companies currently operating in the global blue economy. It provides opportunities in areas such as energy generation, shipping, technology, leisure, tourism and so much more. We advise a wide range of companies in the marine industries and regularly work with groups seeking to establish Irish operations in what has become a hot location in the blue economy.
“Ireland’s attractive corporation tax regime provides a competitive foundation on which Ireland’s blue economy can grow. We have a very attractive, EU-compliant tonnage tax regime for shipping companies. Ireland’s consistency in its taxation policy towards business also provides a welcome level of stability.
The 12.5 percent rate for trading activities is supported by a range of other measures that apply to the multiplicity of industries forming our blue economy; industries such as maritime commerce and finance, marine Information and Communication Technology, shipping, aquaculture and marine tourism.”
Measures targeted at the blue economy include a tonnage tax regime for shipping companies and ship managers and capital allowances for dock undertakings.
“And Ireland’s entrepreneur relief provides a reduced rate of CGT on the first €1 million of gains arising on the disposal of certain business assets. This is important in retaining mobile entrepreneurs and talent in Ireland. However, improvements to this relief could have a very positive impact on jobs and growth,” explained Healy.
The Government commissioned a ‘Marine Tax Review’ report in 2015 which was carried out by Indecon Economic Consultants. The report examined the tax incentives available to the marine/maritime sector and the implementation of the recommendations set out in that report would help in addressing some of the issues now faced by different segments of the sector. But lurking on the horizon, of course, is Brexit.
“Being the largest English-speaking economy in the EU, Ireland is in a good position from which to attract foreign investment in the Blue Economy. Ireland is particularly attractive to UK businesses looking for a post-Brexit EU base. Our highly-educated workforce and young population, together with our membership of the eurozone, are important aspects for companies looking to establish European operations,” said Healy.
He added: “The stability of Ireland’s 12.5 percent corporation tax rate, its straightforward capital allowances regime and 73 international Double Taxation Treaties facilitate international business. While employee taxes are relatively high in Ireland, our Special Assignee Relief Programme (SARP) is designed to encourage the international relocation of key talent within organisations and is important for companies relocating senior management to Ireland.”
And in recent months a number of British companies have sought refuge from the impending storms in Irish ports.
“We are now seeing UK businesses in the blue economy announce their intention to establish their post-Brexit EU operations in Ireland. Here at KPMG we are working with other UK businesses which are seriously considering Ireland as their EU location.”
The Irish Government has tasked the IDA and the Irish Maritime Development Office with marketing Ireland as a location for maritime commerce, ship management and financing activities. Active and highly visible those selling Ireland’s blue economy internationally have been making waves.
And as Jim Healy explains the time for Ireland’s shipping industry to grow could be now. He said: “The industry is cyclical and has been severely depressed for the past decade, with many groups sustaining heavy losses. With ship prices being historically low and a rise in the market eagerly awaited, a number of new entrants are already considering Ireland as a potential location for new shipping ventures.
Ireland’s finance professionals are well-placed to serve the different requirements of this industry. As a global hub for aviation finance, Ireland has a very substantial cohort of professionals with a depth and breadth of relevant experience that can equally be brought to bear in the shipping sector.”
And in the areas of technology and data centres our waters could well provide us with intriguing opportunities as Healy explains:
“There have been recently-announced investments in the area of floating data centres in Ireland. The water-cooled data centres can be situated either on waterborne barges or on land adjacent to a large water source, making Ireland an ideal location for such centres. By using water to cool the IT equipment, such centres can run at reduced costs compared to their air-cooled counterparts. The building of such modular data centres in Ireland ideally taps into Ireland’s natural resources and is just one part of Ireland’s blue economy technology potential.”
He added: “Ireland’s location in the North Atlantic Ocean also provides us with a unique opportunity to develop technology for use in the offshore, tidal and wind energy sectors, and also in global marine markets. It is vital that companies involved in the development of these new technologies may be able to avail of Ireland’s EU-approved Research and Development tax credit or its EU-approved Knowledge Development Box.”
This article originally appeared in The Sunday Business Post and is reproduced here with their kind permission.