| Industry can afford no more surprises from Government as speakers focus on maintaining competitiveness |
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| Over 250 delegates heard from a number of leading industry speakers, including the Financial Regulator Patrick Neary, and Internal Markets Commissioner Charlie McCreevy, at the 6th Finance Dublin Conference 2006, which took place on March 28th and 29th in Dublin Castle. Central to many discussions at the event was the disappointment felt by the industry over the Government’s abolition of the remittance basis of taxation, and the fear that another ‘surprise’ might destroy the sector. Other issues discussed at the event included the creep of complacency into the sector, Ireland’s declining competitiveness vis-a-vis other jurisdictions, and the regulatory burden facing companies. On the positive side, numerous opportunities for growth were identified across all sectors. |
In his first public presentation since assuming the role of chief executive of the Financial Regulator in February, Patrick Neary outlined his vision for regulation going forward. He said, ‘I can tell you that, for its part, the Financial Regulator is committed to fulfilling its role in ensuring, as mandated, that Ireland continues to have a regulatory system that fosters safe and sound financial institutions operating in a competitive and expanding market of high reputation.’
Neary also referred to the Regulator’s ‘Fitness and Probity’ regime, which is now in its second consultation stage, following misgivings expressed by the industry in relation to the initial proposal. ‘I hope that I can expect broad industry support for our most recent proposals. The current comment period on the fitness and probity framework ends in April and we plan to have the regime in place in June,’ he told delegates at the event.
In his key-note speech, European Commissioner for Internal Markets, Charlie McCreevy spoke of innovation in financial services, and how Europe has been in the ‘cockpit of this financial innovation’. More specifically, McCreevy referred to the role innovation is playing in reshaping European investment fund markets, and he gave an update on the Commission’s work activities in the area of investment funds.
The issue of tax harmonisation in Europe was also on the agenda at the conference, and members of the expert tax panel, which included Enda Faughnan of PricewaterhouseCoopers, Paul Reck of Deloitte, Brian Daly of KPMG, and PJ Henehan of Ernst & Young, warned against the Commission’s on-going efforts to introduce some form of tax harmonisation in Europe.
This sentiment was echoed by Eoin Ryan, MEP, who is also a member of the Parliament’s Economic and Monetary Committee (ECON). He said, ‘Let there be no doubt about it- the European Commission’s proposal for a ‘Common Consolidated Corporate Tax Base’ is the thin end of the wedge towards tax harmonisation. Taxation Commissioner, Mr. Kovacs is very pro-tax harmonisation and we should be under no illusion that any move towards a common corporate tax base would be an example of legislation by stealth in attaining a harmonised rate’.
The tax panel also discussed the implications of the abolition of the remittance basis of taxation, and to deal with the issue, the panel put forward a number of proposals. Henehan suggested that the Employers’ PRSI ceiling, which was abolished in 2001, be re-instated, as this would reduce employers’ costs.
Reck suggested introducing a time threshold on the salary side - i.e. that only employees who have worked in
Ireland for between 2-5 years should be eligible to be be taxed under the remittance basis. Daly suggested a certification approach might be considered, which could ‘piggy back’ on the immigration process currently going through the Dail.
Electronic voting was introduced for the first time at the conference this year, with delegates interacting with the speakers on a wide range of topics. Some of the key votes included:
Would you favour a ‘Rolls Royce style’ of regulation as in Sweden, a minimalist approach like in Cayman, or something in between? - Eighty-six per cent voted in favour of something in between, with over eight 8 per cent in favour of the Swedish approach, and 5 per cent for the Cayman model.
Do you think that Ireland can double its numbers employed in financial services in the next ten years - nearly 70 per cent were hopeful that Ireland could.
Do the EU accession countries posed a threat to Ireland as an international financial services centre - the delegates split the vote with a slight majority of 53.5 per cent seeing the accession states as a threat.
Should the IFSC brand be kept - 74 per cent of attendees said that despite the fact that the IFSC regime came to an end on December 31st, 2005, when referring to Ireland’s international financial services sector, the name should be kept.
The threat of complacency in the financial services sector, and the will to stand up for the sector with regards to regulation, stood out as the main challenges facing Irish financial services moving forward at the regulatory panel at this year’s Finance Dublin conference. Chaired by William Slattery, managing director of State Street, the panel included Walter Brazil, managing director of AIB International Financial Services; David Dillon, partner, Dillon Eustace; Pat Farrell, chief executive, Irish Bankers Federation; Deirdre Lyons, head of international financial services, IDA Ireland; Aileen O’Donoghue, director, Financial Services Ireland; and John Larkin, partner, William Fry.
Pat Farrell said that to an extent we are ‘victims of our own success’. He described the current situation of a full employment, high growth economy, and he echoed the concerns of previous panel discussions, when he expressed his fears that a level of complacency had set in and said that ‘we need to stand up for ourselves’.
William Slattery agreed with Farrell. ‘We must resist any temptation to sit on our laurels. Funds can move out as easily as they move in,’ he warned. |
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| Article appeared in the April 2006 issue.
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