47 – 49 Pearse Street, Dublin 2

Foreign Earnings Deduction Consultation,

Income Tax Incentives Section,

Fiscal Policy Division,

Department of Finance,

14-16 Upper Merrion Street,

Dublin 2.

9 May 2014

By email to: taxpolicy@finance.gov.ie

Dear Sir/Madam,

Consultation on Foreign Earnings Deduction

We refer to the public consultation which commenced on 31 March 2014.

Your consultation paper requests views on the Foreign Earnings Deduction, its operation, views on whether the programme should be extended or not and suggestions for changes should the programme be extended. In summary, our position is that the Foreign Earnings Deduction should be continued but it should change its focus from solely targeting developing markets to also include countries with which Ireland already has a trade market with the objective of further developing trade.

The Foreign Earnings Deduction was originally introduced to target the BRICS countries and was further extended in Budget 2013 to eight African states. However, the Foreign Earnings Deduction is an example of a tax incentive looking attractive as a headline but coming up short as a genuine tax incentive because it has such a narrow application.

Data from PwC shows that the value of Ireland's trade with the BRICS and other countries in 2011 was as follows:

USA	€17,718m	Brazil	€252m
Switzerland	€3,166m	Russia	€434m
Japan	€1,480m	India	€186m
Saudi Arabia	€442m	South Africa	€264m
Singapore	€497m	China	€2,012m
Australia	€634m

These figures show that the Foreign Earnings Deduction has the potential to encourage even greater development of trade with lucrative locations such as the US, Saudi Arabia, Switzerland, Singapore, Japan and Australia. Therefore the relief should be extended to growing established markets as well as new markets.

About CCAB-I

The Consultative Committee of Accountancy Bodies – Ireland is the representative committee for the main accountancy bodies in Ireland. It comprises Chartered Accountants Ireland, the Association of Chartered Certified Accountants, the Institute of Certified Public Accountants in Ireland, and the Chartered Institute of Management Accountants.

Brian Keegan, Director of Taxation at Chartered Accountants Ireland, (brian.keegan@charteredaccountants.ie, 01-6377347) may be contacted if any further details in relation to any points made in this submission are required.

Freedom of Information

We note the scope of the Freedom of Information Act in regard to the submission. We have no difficulty with this response being published on the Tax Policy website of the Department of Finance. This response will be published on our own website and will be available to all of our members and the general public.

Yours faithfully

Paul Dillon Chairman, CCAB-I Tax Committee

Source: Chartered Accountants Ireland. www.charteredaccountants.ie