MHC Times Issue 30
01 March 2012
Welcome to the 30th edition of the MHC Times.
In the last month, we welcomed China’s Vice President Xi Jinping to Ireland. It was an appropriately timed visit at the start of the Year of the Dragon, which is considered the luckiest year in the Chinese Zodiac. Ireland is the only member of the European Union that Mr. Xi visited on his recent international tour. Ireland is uniquely positioned between east and west, both in terms of location and culture, a point noted by Ireland’s Minister for Foreign Affairs, Eamon Gilmore during the visit:
“We want China to look at us like a bridge or gateway, where there is potential not just for investment by Chinese companies or investors
directly, but also opportunities to build partnerships with investors in the US.”
Ireland has already formed strong connections with China, with many of our food companies, such as Kerry Group, Largo and Glanbia, seeing rapid growth in the Chinese market. The success of large indigenous food and agricultural organisations has resulted in a ‘return to the land’ with a renewed focus in Ireland on food and agriculture. When it comes to quality food and produce, the market might be global, but Ireland has the local advantage.
Our challenge is to support smaller food organisations scale their business and export to new markets. One example of support from government is the recent provision in the Finance Bill 2012 for a new income tax relief for employees sent to BRICS (Brazil, Russia, India, China and South Africa) economies for business purposes.
The Finance Bill also contained a number of measures to strengthen our position as a platform for conducting international business. These probusiness measures will help to maintain our reputation as a leading jurisdiction for attracting inward investment. Some of the initiatives include:
• an opportunity to use Irish research and development credits to incentivise Irish employees and reduce their effective tax rate to 30%;
• measures to incentivise MNCs to make secondments to Irish employers;
• an ability to establish pan-EEA group property holding companies free of Irish gains tax; and
• further measures to enhance Ireland’s offering as an international asset finance hub.
Another major government initiative is the commercialisation of state assets in the context of the ECB/IMF/European Commission (colloquially known as the Troika) loan programme. The Government has agreed, with the Troika, to the sale of state assets up to a value of e3 billion. Assets for sale or commercialisation will include:
• Bord Gáis Éireann’s Energy business - not including gas transmission or distribution systems or the two gas interconnectors;
• some of the Electricity Supply Board’s (ESB) non-strategic power generation capacity;
• some assets of Coillte Forestry - excluding the sale of land; and
• sale of the State’s remaining shareholding in Aer Lingus.
The sale of these assets is likely to attract significant international interest and we at Mason Hayes & Curran are uniquely positioned to support any activity in this area. Previously, we have advised on the establishment of Gaslink, the independent gas-transportation systems operator, as an independent subsidiary of Bord Gáis Éireann. We have also advised the Commission for Energy Regulation on its agreement with the State-owned industry incumbent, ESB, on its divestment of a number of power generation plants to the Spanish firm, Endesa, in return for permission for ESB to construct a new power plant.
We would hope that these initiatives will continue to position Ireland as a key conduit and base for business. The 2011 IDA Ireland results showed the best employment performance in a decade and a solid flow of new-to-Ireland investment projects from the multinational sector. Even at this early stage, it seems likely that 2012 will also be a strong year for Foreign Direct Investment, with Allergan Pharmaceuticals Ireland set to invest $350 million in its Westport operation and PayPal announcing 1,000 new jobs. We look forward to a positive year ahead and also to welcoming a number of our colleagues to Ireland in October for the International Bar Association Conference. It is the first time that Ireland has hosted this event and we hope to repay the hospitality shown to us throughout the years in other countries. You can find relevant information about visiting Ireland at www.mhc.ie/iba.
If you plan to travel to Dublin this year please do let us know, so we can wish you a Céad Míle Fáilte in person.