{"id":11089,"date":"2023-10-27T08:00:11","date_gmt":"2023-10-27T12:00:11","guid":{"rendered":"https:\/\/jolt.richmond.edu\/?p=11089"},"modified":"2023-11-19T15:10:26","modified_gmt":"2023-11-19T20:10:26","slug":"the-irish-tech-boom-a-jammy-success-or-a-banjaxed-system","status":"publish","type":"post","link":"https:\/\/blog.richmond.edu\/jolt\/2023\/10\/27\/the-irish-tech-boom-a-jammy-success-or-a-banjaxed-system\/","title":{"rendered":"The Irish Tech Boom: a Jammy Success or a Banjaxed System?"},"content":{"rendered":"

The Irish Tech Boom: a Jammy Success or a Banjaxed System?<\/h2>\n

<\/p>\n

By Avery S. Younis<\/p>\n

Once home to the \u201cDouble Irish\u201d tax loophole, Ireland houses well over 100,000 information, communication, and technology professionals.[1]<\/a> Over the past two decades, the country has seen a drastic increase in U.S. tech-based companies moving operations to its country.[2]<\/a> The biggest companies include Apple, Microsoft, Meta Platforms, Alphabet\u2019s Google, X (Twitter), and Amazon.com.[3]<\/a> Dublin alone is an international tech hub with companies such as TikTok, Zoom Video Communications, ServiceNow, Datadog, Toast, and 2K.[4]<\/a> As a result, in 2022, the Irish government derived somewhere between $10 billion and $15 billion of revenue from what would have been collected instead by the U.S. \u201cin a sane system.\u201d[5]<\/a> Corporate profits make up 17% of the Irish government\u2019s tax revenue.[6]<\/a> By comparison, the U.S. government derived only 5.3% of its revenue from taxes on profits.[7]<\/a><\/p>\n

The move for many companies from the U.S. to Ireland is largely motivated by tax law.[8]<\/a> It is estimated that between 1998 to 2018, U.S. businesses funneled $1.2 to $1.4 trillion in profits to low-tax jurisdictions via the complicated international loophole known as the Double Irish.[9]<\/a> The Double Irish is a corporate tax optimization strategy requiring two Irish subsidiaries and the process of shifting profits to the country with lower taxes by exploiting Ireland\u2019s tax legislation allowing multinationals to register profits at the location of their headquarters.[10]<\/a> While this loophole was closed in 2020, many of the profits have not come back to the U.S., leading to windfalls in Ireland. Globally, efforts have been made to limit such tax avoidance by large, international businesses.[11]<\/a> In 2021, 136 countries came together to set a global minimum tax rate of 15% on corporate profits and redirect tax revenue to countries where the products are actually<\/em> sold or used.[12]<\/a> Ireland has yet to implement the new tax rates, but is introducing legislation to begin implementation next year.[13]<\/a> With the government\u2019s overall dependence on corporate tax, the country fears that potential changes to the U.S. tax code and\/or economic restrictions will cause it to suffer.[14]<\/a> To mitigate any future adverse effects and best utilize the windfalls its been given, Ireland is setting up a sovereign-wealth fund.[15]<\/a> This fund will receive 0.8% of annual economic output from 2024-2035.[16]<\/a> This choice is motivated by many suggestions that growing a fund over time would be better than a short-term spending bonanza, if the goal is to produce long-term investment for the real economy.[17]<\/a> According to the Irish Finance Minister, the \u201cfunds are vital to future-proof our economy.\u201d[18]<\/a> The new fund will help cover increased healthcare bills as Ireland is a nation facing one of the fastest rates of demographic change in Europe.[19]<\/a><\/p>\n

Aside from Ireland\u2019s concerns, the European Union has worries of its own: is Ireland too economically dependent on Big Tech to regulate it properly?[20]<\/a> The European Data Protection Board, which oversees the Irish Data Protection Commission (DPC), has criticized the DPC.[21]<\/a> Ireland has the primary responsibility for regulating tech across the EU when it comes to data protection.[22]<\/a> The onus is on the DPC to police and stop the data free-for-all within and between these tech companies.[23]<\/a> With so much of the country\u2019s population being employed by the technology sector and profits contributing to 17% of Ireland\u2019s economy, it makes sense that Irish authorities would want to defend such a vital industry.[24]<\/a> In late September of this year, the Irish government posted job ads for two additional commissioners to lead the DPC.[25]<\/a> These additional commissioners will face quite the challenge, walking into a regulatory body that has faced much criticism.[26]<\/a> This year the DPC has worked upon cases and many major investigations leading to:<\/p>\n