Ireland’s low Corporate Tax rate remains the key factor for attracting foreign direct investment from the US, with new research from Matheson Ormsby Prentice showing that Ireland’s tax regime is seen as an increasingly important advantage over other potential FDI destinations in Europe.

The latest installment of the MOP FDI Index reveals that 40% of the senior US business leaders surveyed perceive Ireland as a good place to do business, with the report also endorsing Irish Government initiatives and the way in which the FG/Labour administration is handling the economic crisis.

On Ireland’s corporate tax rate, the gap between positive perceptions of Ireland compared with its European counterparts has now widened to over 30 percentage points. 62% of respondents in the September wave of research endorsed Ireland’s corporate tax rate as a key positive factor, compared to an average 30% ranking for Western Europe. In April 2011, the equivalent figures were 58% (Ireland) vs 39% (Western Europe).

With the research carried out before the Eurozone leaders agreed on a deal to address the debt crisis, the survey results show the significant unease created by the financial instability in Europe, with 48% saying that the Euro debt crisis would deter them from setting up a business in Ireland.  More worryingly, positive perceptions towards Ireland’s relative economic and political stability fell by 41% since the last round of the Index (in April 2011).

Commenting on the survey findings, Liam Quirke, Managing Partner of Matheson Ormsby Prentice said:

“Despite the political and economic turmoil of the last 12 months, it is clear that international investors still view Ireland as a good place to do business, and understand that Ireland is not just committed to keeping its promises to the companies who have invested here, but  that it has the capacity and the will to do so. However, Ireland does not exist in a bubble, and the findings of the latest MOP FDI Index reinforce the importance of economic and political stability to investment decision makers in the global market.”

While the survey findings show that Ireland’s corporate tax rate remains its key point of difference over other potential European FDI destinations, factors such as Ireland’s pool of skilled labour (34% positive ranking vs 30% for Western Europe), the quality of IT infrastructure (36% vs 31%) and the stable regulatory environment (58% vs 34%), all remain as strong positive attributes when Ireland is compared to its European neighbours.

However, in the context of global competitors for foreign direct investment, the research shows that Asia is proving increasingly competitive, and now ranks higher than Ireland in terms of perceptions on personal tax rates (a key factor for multinationals looking to relocate senior personnel abroad). Positive perceptions towards Asia’s IT infrastructure also improved by eight points, from 47% to 55% (April vs September).

Mr Quirke continued: “To be the best small country in the world in which to do business, we must benchmark ourselves globally, not just against our European neighbours. It also means that we must actually compete to make ourselves a more attractive destination. In defending our pro-enterprise tax policy, our Government has made an important first step towards maintaining Ireland’s competitiveness, with this clearly reflected in the findings of this survey.”