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Ireland’s maritime economy

Nothing blue about Ireland’s maritime economy

Nothing blue about Ireland’s maritime economy

Ireland’s location in the North Atlantic and our unique wind, wave, and tidal natural resources continue to present new opportunities to unlock our blue economy potential.

Ireland’s blue economy continues to grow and develop in line with the targets of the national integrated marine plan. From a tax perspective, the attractiveness of Ireland’s tax regime includes factors such as the 12.5% corporate tax rate and its double taxation agreements with 73 countries.

Jim Healy, KPMG director for its Marine Tax Practice, advises a wide range of companies in the marine industries and regularly works with groups seeking to establish Irish operations. As he cast an eye over blue economy opportunities in Ireland for The Sunday Business Post last week, Healy said Ireland can greatly benefit from global changes in taxation.

“The international taxation environment is rapidly changing,” he said. “There is a focus on greater levels of tax transparency for multinational groups and for the various national tax regimes. Ireland’s tax regime is transparent, with a standard corporate rate and relatively easy-to understand reliefs, such as tax depreciation on capital assets used in the business. It has embraced these changes led by the Organisation for Economic Cooperation and Development (OECD), and the EU. A consequence of these changes is a greater move by multinational enterprises to ensure they have real people doing real jobs in the countries in which they earn their profits and pay their taxes. Ireland can benefit from this global movement.”

Tax measures that assist the development of the blue economy include a fully EU compliant tonnage tax regime for shipping and ship management companies and tax relief for certain expenditure by dock undertakings.

“The more general tax measures that apply to the wider economy also apply to the blue economy including tax relief for certain capital expenditure incurred in floating data centres, offshore wind and hydro projects,” added 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.”

Expansion of the marine sector

Healy said the breadth of Ireland’s maritime finance economy is already expanding by leveraging our existing expertise in advising on complex international financial and funding transactions.

“Since the Brexit referendum, a large number of businesses have announced the establishment of Irish operations,” he said. “Attracted by Ireland’s existing reputation in international insurance, law and finance, marine insurance businesses have been among those to establish here. As regulated businesses established in Ireland, they can continue to transact business throughout the EU.”

“This new facet of Ireland’s maritime finance offering is increasing our visibility in the global maritime industry and provides an opportunity for Ireland to be considered for other insurance and non-insurance maritime enterprises. Ireland is at the heart of the international aviation leasing sector and we are seeing the same legal and financial framework being applied to the leasing and financing of ships.”

Long-term investment in Ireland’s maritime industry is already in motion. Project Ireland 2040 sets out strategic investment priorities for the State’s ports to the tune of €1 billion. These include investments by Ireland’s Tier 1 Ports - Dublin Port, the Port of Cork and the Shannon Foynes Port Company. However, these investments are to be self-funded from the cash flows of the ports’ business.

The plan also sets out investment of €135m of Exchequer funding towards the maintenance and development of six government owned fisheries harbour centres.

“While it is government policy not to invest further Exchequer funding into ports it will be important for Ireland’s ports, particularly the Tier 1 Ports, to deliver on their masterplans to ensure Ireland’s port capacity is sufficient to cater for the levels of economic development and population growth projected in Project Ireland 2040,” said Healy. “Another element of our blue economy is the ability of our seas to produce renewable energy, particularly from offshore windfarms . A targeted policy for the development of offshore wind and sufficient support would help accelerate Ireland’s drive towards a low carbon economy.”

This article originally appeared in The Sunday Business Post and is reproduced here with their kind permission.