In 2009/10 Scotland was in the running for becoming Microsoft’s European hub to provide Cloud services. When they instead settled on Ireland, research was commissioned to look into the reasons why. The rumour mill had created a number of theories including the lack of infrastructure in Scotland and a deficit of skilled tech employees.
The report showed that Scotland has very well-established infrastructure with a talent pool that continues to grow. More recently, the amount of support and focus placed on encouraging young people into the tech sector sets the nation apart from much of Europe.
The findings showed that the significant difference between Ireland and Scotland in attracting large multinational organisations is in corporate taxation policies. Scotland is locked into the UK standard taxation bracket of 20 per cent, whereas Ireland has a much lower rate of 12.5 per cent. Additional incentives, such as the double Irish agreement, mean multinationals – such as Apple – have been paying even less.
This sets difficult competition challenges, and, understandably, often Scotland loses out to large corporations seeking the lower tax rates. Not only is Ireland tempting these multinationals, but any seeking to set up a base in the UK often look to the South East where there is a long-established tech community and international business hub.
We have great support here in Scotland with the Scottish Government offering a number of initiatives and funding for start ups, as well as established tech hubs, such as CodeBase in Edinburgh, the games community in Dundee and industrial tech experts in Aberdeen. We may not be able to compete with low corporate taxation, but our talent and infrastructure is internationally recognised.
We may lose out to Ireland for some corporate bases, but we have a great deal of tech success to shout about, including our own home-grown unicorns and huge array of start ups. The amount of talent coming out of Scotland is impressive, with Edinburgh often being dubbed as Scotland’s digital start up capital.
There are also benefits of our corporate tax that Ireland is missing out on. While Apple has created a large number of jobs for the country, they are not collecting vital funds for government and council initiatives. The money coming into Scotland from corporation tax is used in part to fund community–focused schemes to keep us at the forefront of European innovation. Projects such as smart cities, telecare and superfast broadband will benefit entire communities, and continue to boost the innovative technologies used in our societies.
Calum Lamont is Director at FarrPoint