Tax incentives: A strategic lever for economic resilience

These developments highlight the need for policies that safeguard Ireland’s economic resilience, while also broadening the base of enterprise-driven growth. One option worth considering is a new export credit to support Irish-owned businesses seeking to diversify beyond the US market.

Ireland has long leveraged its taxation system as a strategic tool to attract investment, forming a cornerstone of national economic policy. This approach has yielded substantial corporation tax receipts, largely driven by a small cohort of multinational enterprises. However, this concentration poses a fiscal risk, with recent analyses – such as those from IFAC – highlighting our over-reliance on five or six major multinational groups for a significant share of our receipts.

In contrast, the indigenous Irish corporate sector contributes a relatively modest share to the overall tax take. To address this imbalance, Ireland has historically deployed targeted incentives, such as the Research & Development (R&D) tax credit. While successful in stimulating innovation and building a skilled workforce, the R&D credit is governed by strict qualifying criteria – such as the need to resolve technological uncertainty – that can be prohibitive for many smaller firms.

Recent global developments, particularly the imposition of import tariffs by the United States, have underscored Ireland’s economic exposure to the US market. In light of this, there is a compelling case for introducing a new tax incentive aimed specifically at Irish-owned companies exporting goods and services to non-US markets.

This proposed export credit could be designed with more accessible qualifying conditions than the R&D tax credit, while still encouraging innovation and market diversification. By targeting indigenous exporters, such a measure would serve two objectives: reducing Ireland’s dependence on large US multinationals and mitigating our exposure to US economic policy.

A well-calibrated export incentive would not only support the growth of Irish enterprise but also enhance the resilience and sustainability of our tax base.