Business Irish

Saturday 23 September 2017

'We don't want brass plate firms that come for tax advantages'

Noonan says any companies who set up in Ireland need to create jobs

Finance minister Michael Noonan. Photo: Tom Burke
Finance minister Michael Noonan. Photo: Tom Burke
Colm Kelpie

Colm Kelpie

Finance Minister Michael Noonan yesterday went out of his way to insist that Ireland isn't interested in attracting "brass plate" financial firms to set up here in the wake of Brexit.

The minister was responding to a question about whether Ireland would prefer not to attract certain types of Brexit-related investment, such as investment banking operations.

It followed a Reuters report that went around the world that said the Central Bank here is discouraging - subtly or actively - big investment banks from shifting large trading operations to Dublin.

So we know brass plate operations aren't wanted, but we're less clear on the issue of investment banks.

If the report is true, it simply needs to be explained. If wrong, it needs to be categorically knocked on the head, at the risk of rival locations using a false impression to nab jobs and investment at our expense.

But Mr Noonan didn't deal specifically with the investment bank issue.

"We don't want brass plate operations that simply come here and screw a brass plate on to a door for tax advantages and don't have the strong economic activity here that creates jobs, we don't want that," Mr Noonan told reporters, on the margins of a Department of Finance tax conference in Dublin Castle.

He suggested firms that set up an office in Ireland simply for tax purposes, with no staff and little or no economic activity being generated, were not welcome.

The minister said the Government was focused on getting companies that would bring "solid job creating investment" here.

But there is now a question mark over whether the appetite is here to go after the really big banking game - including investment banks such as Goldman Sachs and Credit Suisse that are looking at locations inside the euro area for potentially major investment.

Mr Noonan was responding to a report that global investment banks are being discouraged from setting up in Ireland following the Brexit vote because they're seen by some officials here as too risky.

Reuters reported the Central Bank had indicated to global investment banks they would face a tough time getting approval to shift operations here and that Ireland was reluctant to absorb large-scale investment banking.

While Mr Noonan didn't specifically address this issue, he did say there were "no restrictions" on potential opportunities, but then returned again to the "brass plate" line.

Ireland has been tipped as a contender to attract high-end banking jobs displaced from London as a result of Britain's vote to leave the EU.

Dublin has been regarded internationally as a viable location for some investment, but has faced stiff competition from the likes of Paris, Frankfurt, Amsterdam and Luxembourg.

Concerns had already been raised around whether the capital had the capacity to take an increase in financial sector jobs given infrastructural constraints around housing, in particular.

International agency Reuters, quoting unnamed sources from within the investment banking community, said the appetite in Ireland was not that high for balance sheet banks. Another source said the Central Bank's lack of regulators was an issue.

To be fair, Mr Noonan did dismiss this suggestion, stating there was no question of not having regulatory capacity as the Central Bank can access regulators from any European country to come to Ireland.

"The bank has been recruiting anyway, so I don't think they'll have to avail of that option," the minister said.

He said it was up to the Central Bank to decide what level of regulation is required for different financial services, adding that the messaging from the Central Bank was "exploratory and explanatory".

"People come with queries and the Central Bank says this is how we do it here and this is the regime," Mr Noonan said.

"There is a lot of interest. I wouldn't be anxious about any aspect of what we're hearing."

Meanwhile, Mr Noonan also said he did not see a huge impact on Ireland from plans in the US for tax reform. President-elect Donald Trump said on the campaign trail that he would slash the US corporate tax rate to 15pc. Mr Noonan, who has recently returned from a trip to the United States, said he met Treasury Secretary Jack Lew.

"I would think that there is tax reform coming and it will involve both lower rates and some arrangement for the repatriation of profits overseas."

Irish Independent

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