THE GOVERNMENT yesterday approved a proposal that will allow US multinationals an additional five-year exemption from having to prepare a second set of accounts under Irish or global financial reporting rules.
It is estimated this could save some US multinationals as much as €20 million in costs. The exemption is designed to protect Ireland’s status as an attractive location for investment.
At present, many American companies located here are required by US regulations to prepare their accounts using the US GAAP accounting standards.
Under Irish law, they would also be required to prepare separate accounts using either of the two accounting standards in use here – Irish GAAP or IFRS, a global standard that is not accepted in the US. This would result in substantial duplication and increased costs for the US firms for no commercial gain.
Legislation introduced two years ago – the Companies (Miscellaneous Provisions) Act 2009 – provided an exemption from the requirement to provide accounts under the Irish rules until 2015.
This new legislation will extend the exemption to 2020.
The extension was sought by the Minister for Jobs, Enterprise and Innovation, Richard Bruton.
Drafting of the legislation by the Office of the Parliamentary Counsel will now begin, and will be introduced to the Oireachtas in the near future.
Originally, this issue was to have been resolved at a global level by achieving convergence between the US GAAP and IFRS standards. Those negotiations were expected to have been concluded by 2015 at the latest. However, the process was slowed by the global financial crisis.
US firms employ about 100,000 people directly in Ireland and account for 70 per cent of IDA-supported employment.
They have a $190 billion foreign direct investment in Ireland, which represents 9 per cent of all US investment in the EU and makes it an important constituency for the Government.
In the event of any conflict between US GAAP and Irish law, the latter will prevail.
