The impact of the global tax reforms on Ireland’s attractiveness to foreign direct investment and the wider economy

This paper explores the possible effects of the global tax reforms on Ireland’s attractiveness to foreign direct investment (FDI) and FDI-related employment. We use data on new greenfield FDI in Ireland and other EU countries over 2011-2020 and estimate a range of possible outcomes on Ireland’s attractiveness to FDI and FDI-related new jobs in the medium and long term. Relative to a situation of no change in the effective corporate tax rates in Ireland and other EU countries, we estimate that the global minimum effective corporate tax of 15% could result in a lower number of new FDI projects coming to Ireland by 3.4 per cent over three years and 3.8 per cent over ten years while the corresponding volume of new FDI invested could be lower by 12.3% after three years and by 14.6% after ten years. Further, we estimate that the number of FDI-related new jobs associated with the number of new FDI projects, could be lower by 2.7 percent over three years and by 3.0 percent over ten years while the number of FDI-related new jobs associated with the new FDI invested could be lower by 3.3% after three years and by 5.7% after ten years.