IDA Ireland warned the government that competition for foreign direct investment was becoming "more intense and aggressive" in pre-Budget discussions and that Ireland's pitch for outside investment was weakened by infrastructure failings.
The State agency for attracting FDI said that the housing shortage and the availability of energy and water were creating challenges in its efforts to secure investment from multinationals.
The IDA also said it was crucial that the tax system was seen as "clear, transparent, and [providing] certainty for investors" amid wider changes in the international tax environment.
"While we acknowledge that Ireland must comply with our international commitments, it is equally important that we remain both internationally compliant and competitive," IDA Ireland management said in a letter to the Department of Enterprise in July before discussions over Budget 2024.
The agency also raised issues around interest limitation rules and conditions schemes to attract high-paid executives that were "unnecessarily complex" and making Ireland less attractive.
"Remember we are sending a signal as to who we are, and what we want," the letter said.
Access to an appropriately qualified and cost-effective labour force is also becoming increasingly important, according to the letter, and restrictions to the SARP scheme offering tax relief to highly paid executives at multinationals were not helping.
"SARP's inability to accommodate the direct hire of new senior executives, without them first being located elsewhere within the [business] group, has cost Ireland the ability to create new key strategic activities in Ireland."
"Locations that can hire new senior staff directly, is likely the location where new teams, e.g. AI [artificial intelligence] teams, will be created."
IDA also said that a 50% marginal tax rate was a challenge "in the context of both international competitiveness and cost of living issues," and sought changes in R&D credits as well as the introduction of short-term tax incentives for digital and green transition and for cross-border hybrid working.
The agency called for government to focus on energy, water, and housing in Budget 2025, citing the need for investment in power and water supply to increase capacity while while not letting cost recovery make Ireland uncompetitive for FDI projects."
In terms of its own budget, the IDA said it was looking for an increase in funding of pay to €38m to help fill twenty vacant posts, adding that it needed greater funding for grants to industry to improve "value proposition" when compared to competing countries.
"In such an uncertain environment, it is critical that IDA continue to partner with clients on their growth agendas and support company transformation through supports for R&D, training and investment in sustainable business practices."
Additional finance was also required to address address "regional market failure" and to encourage investment around the country, which would include the completion of buildings in Galway, Cavan, and Sligo as well as commencement of projects in Letterkenny, Mullingar, Drogheda, and Castlebar.
Photo: Michael Lohan, CEO of IDA Ireland. (Pic: File)
