Europe News

Taxes 'one element' behind tech boom: Irish PM

Ireland has 'best demographics': Prime minister

Irish Prime Minister Enda Kenny said Ireland's attractive tax regime was "one element" behind technology giants like Google and Facebook choosing to locate there, following complaints from the U.S. and U.K. about a tax arrangement used by Apple to shelter over $40 billion.

(Read more: Ireland to close Apple tax loophole, but leaves wiggle room)

Speaking from Dublin's two-day annual web summit, Kenny said that Ireland's tax regime was "statutory-based" and only one factor behind the likes of Google, Facebook and Apple locating their European headquarters there.

"Tax is one element behind how attractive Ireland is. It is also to do with the technology capacity, the track record, and most importantly of all, the talent pool. We have the best demographics of any country for the next 25 years and our education system has been very flexible in dealing with the waves of new creation that are now necessary," he told CNBC.

Ireland has worked hard to establish itself as a technology hub, with Dublin's docklands area transformed into Silicon Dock.

(Read more: France's Silicon Valley to launch start-up hub)

Ireland on track for bailout exit: Minister

On its website, Google Dublin said: "A generation ago, Dublin's docklands section was known for its urban decay. Today, it's Ireland's home base for technology, teeming with start-ups as well as the European headquarters for some of the biggest tech companies in the world."

One attractive feature for a company considering Ireland as a base is its low corporate tax rate of 12.5 percent — a policy that Finance Minister Michael Noonan reconfirmed in the October Budget.

"The Government remains 100 percent committed to maintain the 12.5 percent corporation tax rate, a sentiment I believe is shared by the vast majority of Deputies in this House," he said.

Ireland came under fire though in May, when the U.S. Senate revealed that Apple had cut billions off its tax bill by registering subsidiaries based in the city of Cork as stateless for the purpose of taxation.

Noonan said this month that he planned to make it illegal for a company registered in Ireland to be without an international tax domicile — a sentiment that Kenny reconfirmed.

"In the recent budget, the minister for finance moved to not have stateless companies in Ireland. We are cooperating fully with the OECD (Organisation for Economic Co-operation and Development) and our European colleagues in an international response to the fact that the digital world has moved faster than the legislative world and what we need is an international response to a system where many companies can use different elements of jurisdictional conditions to lower their tax rates," Kenny told CNBC.

Speaking at the summit, Kenny reconfirmed that Ireland would exit its three-year international bailout program on December 15, after receiving an 85 billion euro ($117 billion) loan in 2010 when the cost of propping up its collapsed banking sector became too great.

"We want to exit in a durable and sustainable way… we do not want to go back to this situation ever again," he told CNBC.

(Read more: Ireland and Portugal budget for life after bailout)

He added that he was confident Irish banks would pass the European Central Bank's prospective stress tests, designed to assess systemically important banks' ability to withstand adverse economic conditions.

"Ireland is in a much stronger position than we were… we are in a growth position," Kenny said.

Prior to his interview with CNBC, Kenny marked Ireland's success as a tech center by remotely ringing the opening bell for the start of the trade on the U.S. Nasdaq, a stock exchange which has long been associated with technology companies.

International attendees at the event included Bruce Aust, the head of listings at Nasdaq, along with entrepreneurs like Eric Wahlforss, the founder of music sharing platform SoundCloud, and Jay Bregman, who launched free mobile taxi app Hailo.

—By CNBC's Katy Barnato. Follow CNBC on Twitter: @CNBCWorld