Ireland’s economic model has been one of the great success stories of modern Europe. Our multinational sector has transformed employment and public finances. But we have come to a point now when what made us stand apart feels a little less different and we need to look at future-proofing our economy.
At the same time, Ireland’s private sector continues to underperform when it comes to scaling indigenous companies into globally competitive multinationals. Ireland needs to enhance its offering to FDI as well as putting measures in place to help its home-grown businesses scale into global companies.
Ireland’s corporation tax receipts rose from €4.7 billion in 2014 to €32.9 billion in 2025, now accounting for about 31 per cent of total exchequer tax revenue, compared with just 8.3 per cent in 2014.
This concentration is more than 2.5 times the OECD average (12 per cent). Revenue analysis shows that foreign-owned multinationals generate almost 90 per cent of these receipts, while the three largest companies accounted for 46 per cent of all corporation tax paid in 2024.
While it is unlikely that there will be a significant reduction in corporation tax receipts over the next few years, the picture is far less certain over a 10- to 15-year horizon. The challenge for policymakers is that decisions about future investment are being made today. If Ireland waits until corporation tax receipts begin to decline before responding, it may be too late to attract the next wave of investment required to sustain our spending commitments and economic success. The Government needs to act now.
There are several ways Ireland can enhance its offering to international companies as well as doing more for home-grown private businesses.
Firstly, Ireland needs to invest now for the future. This is not simply about protecting existing industries; it is about identifying the sectors that will drive economic growth in the decades ahead and putting the policies, infrastructure and incentives in place now to attract them.
Ireland should be reinvesting part of today’s corporation tax revenues to develop domestic businesses, support innovation and secure the next generation of FDI. The objective should be clear: act while the tide is still coming in, not after it has turned.
Secondly, Ireland needs to become a more compelling location for high-value research, development and innovation activities. The current R&D tax credit, despite small enhancements in Budget 2027, would benefit from expanding the range of activities covered.
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The relief should be expanded to increase the benefit for advanced manufacturing investment opportunities. Budget 2027 missed an opportunity to introduce a separate innovation incentive for broader innovation activities, supporting investment in areas such as digitalisation and decarbonisation. These reforms would strengthen Ireland’s attractiveness as a global innovation hub while further supporting private companies.
Thirdly, too many promising private businesses are acquired before they reach scale. Irish firms face systemic barriers that limit their ability to grow and scale. Three things are needed to help – capital, capabilities and culture.
The Government has begun to recognise the capital challenge through its proposed €1 billion Scaling Fund announced in Budget 2027. This is a welcome start, but much will depend on the accessibility of funds. Scaling an Irish business towards a public listing should be more attractive and achievable – Euronext Dublin has only about two dozen actively traded equities, compared with nearly 2,000 listed companies across European markets.
The introduction of the State investment account is also a welcome step towards mobilising pools of capital in Ireland, with the potential to channel significant household savings towards active investment and broaden participation in capital markets. The next challenge is ensuring that a meaningful proportion of those funds is channelled into promising Irish companies, helping to create the next generation of indigenous businesses.
While the budget announcement to reduce Capital Gains Tax to 31 per cent is positive, a larger reduction to 20 per cent would have gone a lot further towards encouraging further investment. Furthermore, revised entrepreneur relief should be enhanced and retirement relief expanded.
Irish businesses need the talent, leadership and expertise to help them scale from successful start-ups into global enterprises. The announcement of funding to the National Training Fund to build skills and resilience fit for an AI-enabled workforce was a practical step and a sign that the State can provide supports to nurture these capabilities. But more of this is needed. Finally, Ireland must create a culture that rewards ambition, celebrates success and makes scaling indigenous businesses a national priority.
Not every competitiveness issue requires money. Often, smaller businesses face administration burdens that consume valuable time and resources without delivering meaningful economic benefits. Simplification has minimal cost to the exchequer but can have a significant impact.
For example, in our pre-budget submission, we suggested pre-populated simplified tax returns for small businesses. The budget move to allow enhanced reporting requirements to be submitted monthly rather than on a real-time basis is a welcome step. However, there remains a strong case for moving to an annual reporting requirement.
The announcement of a holistic assessment of the various grant schemes, enterprise tax incentives and business development programmes now on offer will hopefully lead to meaningful simplification. However, this will only truly deliver impact if a cross-departmental approach is taken, as success is measured by a reduction in form-filling and hours saved processing applications.
Ireland does not need a completely new economic model. The foundations of our success remain strong. However, maintaining success in a changing world requires enhancing our offering to FDI and the private sector – reinvesting for competitiveness. The real question is whether we are prepared to invest today in what will make us attractive tomorrow.
Paraic Burke is head of tax at PwC Ireland