It’s not because they love Guinness 9

Emma Boon 2020 Tax Commission

Micro-blogging website Twitter is to set up a new HQ in Dublin and I’m willing to bet that it’s not because they love Guinness.

Ireland’s attractive 12.5 per cent corporate tax rate is bound to have been a big sweetener for the firm, which has been valued at upwards of £5 billion.

The news is a blow to the Treasury, who were hoping that a London office opened earlier this year would become Twitter’s European HQ. But catchy names, like Tech City and Silicon Roundabout, and even the irresistible allure of Boris Johnson are not going to be enough to convince the micro-blogging website to bring its money over here when our main rate of corporation tax is 26 per cent.

The list of internet firms who are now benefitting from Ireland’s lower corporation tax reads like the bookmarks menu on most people’s internet browsers: Google, Facebook, Amazon, Yahoo, eBay and Microsoft all have offices there, to name but a few. The presence of businesses like these means more jobs in Dublin. Google alone is one of Dublin’s biggest employers, with 2,200 staff.

With modern technology allowing them to work from almost anywhere in the world, companies like Twitter are not going to choose the UK without a more competitive corporate tax rate as an incentive. Read our briefing on corporation tax from Tax Commissioner Anthony J. Evans for more.

Emma Boon

Emma is the Campaign Director of the TaxPayers’ Alliance. She leads efforts to change policy through powerful campaigns and is the voice of the TPA in the media.

Follow @emmaboon

Steve Collins

Erm, our corporation tax rate doesn’t seem to have put off Google who have just taken a 7 storey building in East London, or any of the other thousands of global companies either HQ’d or with a major presence in London, so I can’t really see your point.

It’s not as if London is dying on its feet. Clutching at straws I’m afraid.

http://therantingbrit.blogspot.com/ Gamb_1993

But it’s not their European HQ, which would make more jobs and give London even more prominence.

http://www.facebook.com/profile.php?id=506540706 Michael Simpson

Popular though the social-blogging site may be, if you want to talk about wealth creation, there’s a crucial distinction between Twitter and Google, and that’s a clear revenue stream. Google has one, Twitter does not.

Roland Gilmore

BBC relocate staff to Salford. Shock/horror! The UK lends Eire £100sM and no one blinks despite The Republic refusing to increase their rate of corporation tax to fund the loans. A high risk investment if you were to ask me but tempered by the fact that Twitter (can’t be bothered personally) may help in some way to repay that loan.
The implication that cutting our rate now will somehow significantly influence foreign companies to locate their HQ here in London and thus help resolve the unemployment problem and contribute to resolving our deficit here is fanciful. There are too many other considerations and risks to list. To pull one specific issue into the spotlight masks the fact that office location and/or relocation decisions are more complex matters than inferred.

http://therantingbrit.blogspot.com/ Gamb_1993

Don’t forget that the bail-outs were pretty much forced on Ireland who continuously refused them.

To think that companies wouldn’t want to go to a cheap place is, itself, ludicrous. Companies in London currently are there because the British specialise in dealing with money, if you were to add that to it being cheaper I’m sure there’d be movements by various companies, or we’d see new ones spring up!

Then again the whole tax system needs to be made cheaper to encourage both the rich and companies here.

Anonymous

Twitter, as an online company, are not exactly going to create loads of jobs wherever they set up anyway. This is basically a way of paying slightly less tax but is relatively little skin off our nose.

The question is, do we really want public finances like Ireland’s? Having a low corporate tax might help them attract business, but it has done absolutely nothing good for their public debt, which has forced them to take EU bailout money.

This is why the TPA can never be taken seriously – they advocate a low-tax, finance-driven economy, but the recent crisis has shown this makes such an economy volatile and in need of outside aid occasionally. Given that the TPA also rabidly oppose any further integration of Britain into Europe (fair enough) how can they make things add up?
Anonymous

Britain’s corporation tax rate is also highly ‘competitive’. It is one of the lowest in the developed world; significantly lower than Germany, Japan, the USA, France, etc. Compared to our main economic competitiors we are positively business-friendly. Why will the TPA not acknowledge this?

http://www.taxpayersalliance.com The TaxPayers’ Alliance

You’re being a little selective there. The OECD average is 23.6% (and falling), as shown here – http://www.oecd.org/dataoecd/26/56/33717459.xls

Britain’s corporate tax rate in fact compares rather unfavourably with our economic competitors.

Anonymous

Compared to our main economic competitors we have a low corporation tax rate. My thanks for those statistics which tend to back up what I was saying about other major global powerhouses.

Countries with a lower corp tax rate than the UK (26%) (17):

Austria, Denmark, the Netherlands (25%)
South Korea (24.2%)
Israel (24%)
Switzerland (21.2%)
Estonia (21%)
Iceland, Chile, Greece, Slovenia, Turkey (20%)
Poland, Slovakia, Czech Republic, Hungary (19%)
Republic of Ireland (12.5%)

Countries with a higher tax rate (15):

Japan (39.5%)
USA (39.2%)
France (34.4%)
Belgium (34%)
Germany (30.2%)
Australia, Mexico, Spain (30%)
Luxembourg (28.8%)
NZ, Norway (28%)
Canada (27.6%)
Italy (27.5%)
Portugal (26.5%)
Sweden (26.3%)

Many of the countries in the first list have by necessity a low corporation tax rate to attract business because they lack things the UK has – a skilled workforce, attractive cities, and a large population. Businesses in the UK choose here because we have educated and skilled workers, a vast pool of workers to select from and because cities like London are hubs of cultural activity with lots of people coming from abroad annually. Suffice it to say Ireland does not have many, if any, of those factors going for it, hence its low rate to attract business.

If you look at similar countries to the UK in terms of demography – the US, Japan, Germany, France, Australia, Italy, Spain etc. – nearly all have a higher corporation tax rate than us. For a country ou size we are remarkably business-friendly. Ultimately we are somewhere around the median countries in the OECD, but you cannot really compare us to places like the Republic of Ireland, Slovakia, the Czech Republic etc. There are different business factors than the corporation tax rate, you know!