Why is income tax a key factor for Irish companies while attracting overseas talent to Ireland?

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Iyengar, Raghavendra
Issue Date
MBA in Finance
Dublin Business School
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Problem Ireland is going through a phase where companies are facing skills shortages in a number of sectors such as IT, accounting and healthcare. Businesses are grappling due to the lack of skilled employees, and are facing problems in productivity and growth. One way to alleviate this problem is by bringing in international talent into the country to fill in skilled positions. However, with the high marginal tax rates and the tax system being extremely progressive starting from mid-level incomes, income tax will be a decisive factor when these individuals consider relocating to Ireland. Furthermore, with Brexit just around the corner, Ireland has a plethora of opportunities to attract skilled specialists into the country. Brexit will also be an integral aspect of this research. This research will primarily focus on the importance of a robust tax relief programme for international workers in skilled jobs. Methodology The primary qualitative research was obtained via six semi-structured interviews. Three interviews were conducted with recruiters to understand the problems they and companies are facing due to the skills shortage in Ireland. The other three interviews were conducted with Irish expatriate tax experts to gather their views on the progressivity of the Irish personal tax system and the tax relief programme in place for international assignees deputed on assignment to Ireland. Conclusions and Recommendations The findings of the research conclude that Ireland does have a progressive income tax system and the marginal rates too are quite high. Even though the tax relief programme in place for international workers deputed on assignment is a bright start, more needs to be done from a tax relief standpoint for bringing in International talent into the country. Having a tax relief scheme which targets individuals working right from mid-level positions to executive positions is extremely important.