MULTINATIONALS PAY LESS TAX DESPITE CURB ON AVOIDANCE - Big multinationals are paying significantly lower tax rates than before the 2008 financial crisis, according to Financial Times analysis showing that a decade of government efforts to cut deficits and reform taxes has left the corporate world largely unscathed. 

Companies’ effective tax rates - the proportion of profits that they expect to pay, as stated in their accounts - have fallen 9% (two percentage points) since the financial crisis. This is in spite of a concerted political push to tackle aggressive avoidance. Governments' cuts to their headline corporate tax rates only explain around half the overall fall, suggesting multinationals are still outpacing attempts to tighten tax collection. Drawing on 25 years of financial statements, the FT examined the tax rates paid by the world's 10 biggest public companies by market capitalisation in each of nine sectors. The tax rates reported by the 10 multinationals with the largest offshore cash piles were also examined. The results show that the corporate contribution to public finances has fallen since 2008 as a proportion of profits - whether measured by headline rates, reported effective rates, or the rates actually paid to governments. Rules allowing companies to delay when some taxes are paid mean reported effective rates and actual amounts paid can vary substantially in a given year.

***

IRISH SMEs AREN'T INVESTING ENOUGH, WARNS ESRI STUDY - Under-investment by small and medium-sized businesses was at over 30% in 2016, with financial issues the biggest contributing factors, research has found. 

The study by the Economic and Social Research Institute (ESRI) stated that there was "clear evidence" that actual investment is below what would be expected, given how companies are currently performing. ESRI researcher Conor O'Toole concluded that financial factors explain between 12% and 18% of the investment gap. "What we found was that there was clear under-investment, by about 30% in 2016," Dr O'Toole told the Irish Independent on the margins of a Department of Finance conference at which he was presenting the findings. "We went on to say that part of that would be explained by financial factors, access to finance or indebtedness, and we found that 20% of the gap was explained by financial factors. "The gap has reduced dramatically from 2014, 2015 and into 2016. But it's still there." The study comes in the wake of claims by the Organisation for Economic Co-operation and Development (OECD) that the large productivity gap between Irish-owned businesses and multinationals has widened, with home-grown firms held back by weak managerial skills.

***

IRELAND IS NINTH BIGGEST SOURCE OF INWARD FDI TO THE US - Close to 800 Irish companies have operations in the US, employing more than 100,000 people, according to new figures. 

The data comes as State body Enterprise Ireland recently redoubled efforts to promote Irish businesses in North America in the wake of Brexit. The number of Enterprise Ireland client companies who opened new offices in the US in 2017 rose 18% via the prior year to 59. Locations selected by firms included New York, Massachusetts, New Hampshire, Texas, Missouri, Colorado and Washington. The agency said Irish companies operated in all 50 states and across a broad range of industries, including construction, education, energy, environmental, medical devices and software. "The US remains an attractive market for client companies," said Sean Davis, regional director North America, Enterprise Ireland. "Better connectivity has played a huge part and shouldn’t be overlooked. All entrepreneurs want to be able to get to their destination in one hop, so the fact that we have direct flights going to Atlanta, Chicago, New York, Boston and to a number of locations on the west coast has been beneficial," he added. According to the US Bureau of Economic Analysis, the value of Ireland's foreign direct investment (FDI) was calculated at over $85 billion (€69 billion) in 2017, ranking Ireland the ninth largest source of FDI.

***
THAI-OWNED HOTEL CHAIN SIZING UP IRISH ENTRY - International hotel chain, Vienna House, is considering a move into the Irish market and will take on alternative accommodation providers, such as Airbnb, writes the Irish Examiner. 

The Austrian company - owned by Thai real estate developer, U City - is broadening its appeal to the modern traveller, via a new brand that offers more than just a hotel room. A range of accommodation choices - hotel room, family rooms, studio apartments, even office space to rent - will be offered under one roof. The new ‘Vienna House R.evo’ brand is described as a ‘tribrid’ model, incorporating elements of hotel, hostel, and serviced-apartment accommodation. The first of the new properties will open in Munich, later this year, and the group has short-term plans to open in Glasgow, Bangkok, Budapest, and Hamburg. The initial focus is on centrally located sites, in mid-to-large sized cities, and the company is also looking at Dublin, as a potential location. It is likely to expand through a franchise, rather than a centrally-owned model. Vienna House, which was acquired in early 2017 by U City, for nearly $350m, already operates 34 hotels, but these are all under its more mainstream product offerings and are located in central and eastern Europe in Slovakia, Russia, Romania, Poland, Austria, Germany, France, and the Czech Republic.