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People are our greatest asset

There is a momentum and vibrancy in Cork presently that you can almost touch.

The technology sector is now the fastest growing sector in Cork with IDA reporting 61 overseas tech companies in Cork employing 14,000 people (a 63% increase in 5 years). Two of the largest companies in the world by market cap, Apple and Amazon, have significant presences here. The cyber security cluster continues to grow and flourish.

25% of Cork City’s footprint has yet to be developed, and the docklands site is an amazing opportunity to attract further investment if we get it right.

However, national government policy plays a critical role, particularly in areas like housing and tax. It is critical that we address housing supply – there is little point building office blocks if the workers have nowhere to live.

Tax competitiveness

Government tax policy for decades has supported inward investment – and it transformed the economic landscape in Ireland.

But it brings risk – we are a small open economy and more exposed to international developments given our economic ties with the USA and UK in particular.

Competition for mobile investment is fierce. Countries large and small are vying for the exact same investment that we are vying for.

Ireland faces significant challenges in international tax. OECD initiatives like BEPS and the EU Anti-Tax Avoidance Directive (ATAD) do have an impact on low tax countries like Ireland and we have had to make many significant changes to our international tax regime which narrows the competitive gap between Ireland and other EU countries.

US tax policy reform is a protectionist policy, designed to keep as much investment in the USA as possible.

As Brexit looms, we need to pay very close attention to any tax policy changes in the UK. When Ireland first adopted the 12.5% rate of tax the UK corporate tax rate at the time was 30%. The UK rate is scheduled to reduce to 17% by 2020. However, Brexit brings opportunity too, particularly in the FinTech sector as companies seek out an EU-based location.Cork can position well here.

We have to play fair, but we must play to win. We still have one of the lowest corporation tax rates in the EU, complimented by a 25% tax credit for qualifying R&D activities. However our personal tax rates remain high, which can be an inhibitor to attracting global talent and our rates of capital gains tax rate for risk-taking entrepreneurs remains too high versus competitor regimes.

Global technology predictions

Globally, the pace of change in technology shows no sign of abating. We recently launched our global “Deloitte Predicts” report which gives our predictions for the future of technology, media and telecommunications.

Our view is that China will continue to invest in new industries like mobile payments, mobile online shopping and bike sharing which could generate tens of billions of dollars in revenue by 2023.

3D printing will rebound, expecting to generate €2.4 billion (US$2.7 bn) in revenue in 2019.

Smart speakers are set to become the fastest growing connected device, with an installed base exceeding 250 million units worldwide by the end of 2019 and will be worth €6.2 billion (US$7bn) in 2019, a 63% growth rate versus 2018. But despite being part of traditional media, radio will be the star that will continue to shine brightly, with most markets recording listenership per week of around 90% which could give interesting opportunity for revenue growth.

Such a juxtaposition. In my home, my 7-year-old chats to Alexa like she is part of the family. But her grandparents grew up listening to the radio waves. It is interesting to see how technology, in some ways, comes full circle.

Cork’s opportunity

So whether it is smart speakers, or digital radio, in my view the most successful technologies will be the ones that put human needs at their core. The successes will be to those companies who develop technologies that empower and enable humans, technologies that make our lives better.

This will require people with innovative ways of thinking, problem solving skills, and creativity to participate and develop the technologies of tomorrow. It will require people who are globally minded. It will require tenacious site leads or managing directors fighting for Ireland’s share of international investment.

It shows the importance of keeping pace with change and that we nurture talent to drive success.

A company, a brand, a country, a city is only as good as the creativity, drive and ambition of the people who drive it. When I look around Cork, we have that in spades, because really it is people who truly make a difference.

Caroline O’ Driscoll is a Corporate and International Tax Partner at Deloitte Ireland. She specialises in advising companies and entrepreneurs in the technology sector on inward and outward investment, structuring, mergers, acquisitions and exits. The above article first appeared in the US Business in Ireland supplement in the Irish Examiner on 8 February, 2019.

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