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Closing of tax scheme 'hasn't hit investment'

The investment pipeline into Ireland hasn't been affected by the end of the so-called 'Double Irish' tax avoidance scheme, IDA chief Martin Shanahan has said.

In the Budget, Mr Noonan announced the closure of the scheme, which allowed companies to shift profits to tax havens, in one of the biggest changes to Ireland's corporate tax structure since the 1990s.

But he also announced plans to give tax breaks to some companies that derive profits from patents, called the Knowledge Development Box.

Fine Gael TD John Deasy yesterday told the Public Accounts Committee, which Mr Shanahan was addressing, that he disagreed with the move to close the Double Irish.

He said he didn't believe the country or the economy was in the "right place" to give up the scheme.

But the IDA chief said there hadn't been a negative impact.

"I would point to evidence of the fact that this hasn't had a detrimental impact [on] the pipeline of investments since the Budget was announced.

"I would also say, that, even in advance of the budgetary announcement, there was a high degree of expectation amongst the international investment community that Ireland would do something in this area.

"We're still seeing very, very large investments coming through the pipeline," Mr Shanahan said.

Mr Deasy also told the committee that he had concerns about collective bargaining. He said proposed legislation that would give workers greater rights could put off US investors. "We were lining up reasons for them [multinationals] not to come here," he said.

"We have just ended the Double Irish. We don't really know what is going to happen. The last thing we need to be doing is passing more legislation that could put a doubt in any US investor's mind about coming to Ireland. I just think the timing is bad."

Mr Shanahan said anything that the Oireachtas did in terms of legislation should have an eye on competitiveness.

He said in terms of labour market flexibility, Ireland scored highly.