Ireland (Dublin)

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Business Environment

Ireland is a member of the European Union. Government designated Dublin as an international financial services centre (IFSC) in 1987. Many of the world’s major banks and insurance companies as well as the principal Irish institutions have established operations in the IFSC. Over 220 major international companies use the IFSC as a centre for global treasury activities.

In 2003 regulation of the financial sector was consolidated under the Irish Financial Services Regulatory Authority, set up under the Central Bank of Ireland.

Taxes

The corporate tax rate is 12.5% (2004). A 25% rate applies to passive income and income from certain land dealing activities, mining and petroleum activities. A special 10% rate applies to ‘passive income’ and income from defined land-dealing activities, mining and petroleum. A 10% rate applies to active trading income from defined existing manufacturing companies and the qualifying income of International Financial Services Centre and Shannon-based companies. The special rate will expire between 2003 and 2010 (depending on the type of company in question and when it received approval for the 10% rate) and will be replaced by the standard 12.5% rate. Capital gains are taxed at 20%. Exports are zero rated for value-added tax (VAT), except those to unregistered persons in the EU. Companies that export 75% or more of their output can apply to the Revenue Commissioners for authorisation to receive almost all of their goods and services from Irish and foreign suppliers free from any VAT. Ireland is a member of the EU and all border controls between member countries have been eliminated under the Single European Market that allows duty free importation of goods from other EU countries. Goods imported from outside the EU are subject to customs duty at the rate set by the EU’s Common Customs Tariff. Source: Government of Ireland and KPMG.

Repatriation of profits
A withholding tax of 24% applies to dividends and other profit distributions made by an Irish tax resident company. An exemption is available in the case of payments to certain shareholders including:

Irish tax-resident companies;
charities and pension funds;
certain collective investment funds;
certain employee share ownership trusts;
certain residents of the EU member states or tax treaty countries;
certain companies and individuals that are residents of the EU member states or tax treaty countries.

Double tax agreements
Ireland has double taxation agreements with Australia, Austria, Belgium, Canada, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Israel, Italy, Japan, Latvia, Lithuania, Republic of Korea, Luxembourg, the Netherlands, New Zealand, Norway, Pakistan, Poland, Portugal, Russia, Spain, South Africa, Sweden, Switzerland, the UK, the US, and Zambia. Treaties have been concluded with Malaysia, Mexico, Romania, the Slovak Republic, and Egypt to be introduced in 2000. Agreements are under negotiation with Greece, India, and China.

Stock Exchange
The Irish Stock Exchange operates the Irish market in equities and government bonds and is under the supervision of the Central Bank of Ireland. The Irish Stock Exchange ISEQ overall index ended 2001 at 5,707, a 0.27% decline for the year. Market capitalization was €80.75 billion at 31 December 2001, a 3.99% decline from a year earlier. The overall index highest point in 2001 was 6,526.81 on 21 June and its lowest was 4,550.58 on 21 September. Internet: www.ise.ie

Contacts
Irish Development Agency
Wilton Place, Dublin 2, Ireland
Tel +353 1 603 4000
Fax +353 1 603 4040
E-mail: idaireland@ida.ie
Internet: www.idaireland.com

Latest available figures

Country Description
Republic of Ireland (Eire); Population: 3.92 million (April 2002 census). Capital: Dublin (pop. 495,101).

Currency (January 2004)
US$1 = €0.79 euro

Legal system
Based on English common law substantially modified.

Government
Parliamentary democracy. Consists of a president and a bicameral Parliament called the Oireachtas, made up of the House of Representatives, the Dail Eireann, and the Senate, the Seanad Eireann. The Senate can suggest amendments to legislation passed by the Dail, but cannot permanently block legislation. Senate elections are held no later than 90 days after the Dail’s dissolution. The president is elected for a seven year term. The 166 members of the Dail are elected for a five-year term by proportional representation (single transferable vote) in multi-seat constituencies. The president formally appoints the prime minister (the Taoiseach) after he or she is chosen by vote in the Dail. The prime minister appoints a cabinet of a minimum of seven and a maximum of 15 members. Under the Constitution, a successor government can be formed without a general election where a government ceases to retain the support of a majority in Dáil. Of the 60 members of the Seanad, 11 are nominated by the prime ministe, six are selected by the universities, and 43 are elected from five vocational panels soon after the parliamentary elections.

Executive
President: Mary McAleese of the Fianna Fail (elected October 1997)
Prime minister: Bertie Ahern of Fianna Fail (re-elected in May 2002)

Cabinet
Deputy prime minister (Tanaiste), minister for enterprise, trade and employment: Mary Harney
Finance: Charlie McCreevy
Foreign affairs: Brian Cowen
Justice, equality and law reform: Michael McDowell
Agriculture, food: Joe Walsh
Defence: Michael Smith
Environment and local government: Martin Cullen
Health and children: Michael Martin
Education, science: Michael Woods
Transport: Seamus Brennan
Communications and natural resources: Dermot Ahern
Community, rural and Gaeltacht affairs: Eamon Ó Cuív
Arts, sport and tourism: John O'Donoghue
Social and family affairs: Mary Coughlan
Attorney general: Rory Brady

Politics
The minority centre-right coalition government of Fianna Fail and Progressive Democrats have been in power since elections in June 1997. In the elections held on 17 May 2002 Fianna Fail won 80 seats in the 166-seat parliament and the Progressive Democrats won eight seats. Fine Gael won 31 seats, down from 23 in 1997, Labour won 21 seats, the Greens six seats, Sinn Fein five seats, and independents 14.

Economy
Ireland is a member of the European Union. Industry accounts for about 42% of GDP and about 80% of exports. Other services accounts for 38% of GDP. Multinational firms contribute substantially to Irish output and as a result real GNP is preferred to real GDP as a measure of economic growth for the country. Industry: chemicals, medical and pharmaceuticals products, computer equipment, machinery and transport equipment.

Gross Domestic Product (2003 estimated)
GDP real growth 1.6%.

Balance of payments (2001)
Current account balance of trade: deficit €345 million. Made up of merchandise: surplus €34,258 million; services: deficit €17,380 million; Total services: deficit €34,602 million.

External reserves
(June 2000) €5,532 million (£7,024 million), an increase of 3.3% from 31 December 1999

Inflation rate (CPI) (November 2003 annual)
3.3%

Labour force (December 2003)
1.88 million workers. Unemployment: 4.5%

Government accounts (2001)
Total budget surplus €650 million. Current receipts: €28,738 million. Current expenditures: €20,404 million. Total capital expenditures: €6,020 million (estimates 3 January 2002). Government financial year: calendar year

Public holidays (2004)
1 January; 17 March (St Patrick’s Day — the following Monday is a holiday (not official) if 17 March is a Sunday.); 9 April (Good Friday); 12 April (Easter Monday); 3 May (Bank holiday); 7 June (bank holiday); 2 August (summer bank holiday); 25 October (Halloween weekend); 25 December (Christmas day); 26 December (St. Stephen's Day). Link: Holiday Festival.

Time Zone
GMT. The clock goes forward one hour at 1:00 on the last Sunday in March and back to normal time at 1:00 on the last Sunday in October.

Sources/Links
Government of Ireland
Central Bank of Ireland
Central Statistics Office
Eurostat
International Monetary Fund
US State Department: Ireland