Transparency of the Regulatory System
Ireland's judicial system is transparent and upholds the sanctity of contracts, as well as laws affecting foreign investment. These laws include:
- The Companies Act 2014, which contains the basic requirements for incorporation in Ireland;
- The 2004 Finance Act, which introduced tax incentives to encourage firms to establish headquarters and conduct research and development in Ireland;
- The Competition (Amendment) Act of 1996, which amends and extends the Competition Act of 1991 and the Mergers and Takeovers (Control) Acts of 1978 and 1987, and sets out the rules governing competitive behavior;
- The Industrial Development Act (1993), which outlines the functions of IDA Ireland; and,
- The Mergers, Takeovers and Monopolies Control Act of 1978, which sets out rules governing mergers and takeovers by foreign and domestic companies;
The Companies Act (2014), with more than 1,400 sections and 17 Schedules, is the largest-ever Irish statute, consolidating and reforming Irish company law for the first time in over 50 years.
In addition, numerous laws and regulations pertain to employment, social security, environmental protection and taxation, with many of these keyed to EU Directives
International Regulatory Considerations
Ireland has been a member of the European Union since 1973. It incorporates all EU legislation into national legislation and applies all EU regulatory standards and rules. Ireland is a member of the World Trade Organization (WTO) and follows all WTO procedures
Laws and Regulations on Foreign Direct Investment
One of Ireland's most attractive features as an FDI destination is its relatively low corporate tax rate. Since 2003, the headline corporate tax rate for all firms, foreign and domestic, has been 12.5 percent – about half the current OECD average of 23.9 percent. This rate is one of the lowest in the EU, and the Irish government continues to strongly oppose EU efforts to harmonize corporate taxes to a single EU rate.
In 2014, the government announced that firms would no longer be able to incorporate in Ireland without also being tax resident. Prior to this change, firms could incorporate in Ireland and be tax resident elsewhere, making use of an arrangement colloquially known as the “Double Irish”, to reduce tax liabilities. The Irish government has indicated it will adhere to future decisions reached through the OECD’s Base Erosion and Profit Shifting (BEPS) discussions. The government implemented a Knowledge Development Box (KDB), effective 2016, which is reportedly consistent with OECD Guidelines. The KDB allows for the application of a tax rate of 6.25 percent on profits arising to certain intangible/Intellectual Property assets that are the result of qualifying research and development activities carried out in Ireland.
Competition and Anti-Trust Laws
The Competition and Consumer Protection Commission (CCPC) is an independent statutory body with a dual mandate to enforce competition and consumer protection law in Ireland. The CCPC was established on 31 October 2014 after the amalgamation of the National Consumer Agency and the Competition Authority.
The Competition Act of 2002, subsequently amended and extended by the Competition Act 2006, strengthens the enforcement power of the Competition Authority, now the CCPC. The Act introduced criminal liability for anti-competitive practices, increased corporate liability for violations, and outlined available defenses. Most tax, labor, environment, health and safety, and other laws are compatible with EU regulations, and they do not adversely affect investment. The government publishes proposed drafts of laws and regulations to solicit public comment, including those by foreign firms and their representative associations. Bureaucratic procedures are transparent and reasonably efficient, in line with a general pro-business climate espoused by the government.
The Irish Takeover Panel Act of 1997 governs company takeovers. Under the Act, the Takeover Panel issues guidelines, or Takeover Rules, which regulate commercial behavior in mergers and acquisitions. According to minority squeeze-out provisions in the legislation, a bidder who holds 80 percent of the shares of the target firm (or 90 percent for firms with securities on a regulated market) can compel the remaining minority shareholders to sell their shares. There are no reports that the Irish Takeover Panel Act has prevented foreign takeovers, and, in fact, there have been several high-profile foreign takeovers of Irish companies in the banking and telecommunications sectors in the recent past.
In 2006, for example, an Australian investment group, Babcock & Brown, acquired the former national telephone company, Eircom, and subsequently sold it in 2009 to Singapore Technologies Telemedia. The EU Directive on Takeovers provides a framework of common principles for cross-border takeover bids, creates a level playing field for shareholders, and establishes disclosure obligations throughout the EU. Irish legislation fully implemented the Directive in 2006, though the Irish Takeover Panel Act 1997 had already incorporated many of its principles.
Mergers over a certain financial threshold must be notified to the Competition and Consumer Protection Commission (CCPC) for review as required by the Competition Act 2002, as amended (Competition Act).
Expropriation and Compensation
The government normally expropriates private property only for public purposes in a non-discriminatory manner and in accordance with established principles of international law. The government condemns private property in accordance with recognized principles of due process.
Where there are disputes brought by owners of private property subject to a government action, the Irish courts provide a system of judicial review and appeal.
There is no specific domestic body for handling investment disputes. The Irish Constitution, legislation, and common law form the basis for the Irish legal system. The Department of Business, Enterprise and Innovation (DBEI) has primary responsibility for drafting and enforcing company law. The judiciary is independent, and litigants are entitled to trial by jury in commercial disputes.
ICSID Convention and New York Convention
Ireland is a member of the World Bank-based International Center for the Settlement of Investment Disputes (ICSID) and a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, meaning local courts must enforce international arbitration awards under appropriate circumstances.
In recent years, some U.S. business representatives have occasionally called into question the transparency of government tenders. According to some U.S. firms, lengthy procedural decisions often delay the procurement tender process. Unsuccessful bidders have claimed they have had difficulty receiving information on the rationale behind the tender outcome. Additionally, some successful bidders have experienced delays in finalizing contracts, commencing work on major projects, obtaining accurate project data, and receiving compensation for work completed, including through conciliation and arbitration processes. Successful bidders have also subsequently found that the original tenders may not accurately describe conditions on the ground.
The Companies Act 2014 is the most important body of law dealing with commercial and bankruptcy law, which Irish courts consistently apply. Irish company bankruptcy laws give creditors a strong degree of protection.