THE BIGGER AI RISK FOR IRELAND ISN’T JOBS—IT’S TAX

Brightbeam remains bullish on Ireland's job prospects in the age of AI. But our tax base? That might be another question.

There are two ways our corporation tax pipeline could be reduced by AI. The first one was outlined in the Irish Times this week.

Digital Infrastructure Ireland, a lobby group for data centres, argues that if multinationals can't build them here, enterprise IP will migrate to other jurisdictions. And tax take will follow. The mechanic underneath: tax follows what you have.

The second concern isn't yet in the public debate, and it's the one we're more concerned about. Under the OECD's substance test – dominant since BEPS in 2015 and confirmed under Irish law by the Apple judgment in 2024 – profit attaches to wherever the value-adding work physically happens. In other words, tax also follows what you do.

So if AI is doing the work, on servers liberally spread across the globe, the value it's adding gets taxed wherever those servers sit.

The two mechanics will affect different sectors at different rates. In some types of business, what you have and what you do are bundled tightly together; in others they've come apart.

In medtech, biopharma and other advanced manufacturing – roughly a third of Ireland's corporation tax base – they're bundled. The patent is tied to a regulated manufacturing process. The approval is tied to a specific plant. Owning the IP and performing the work are the same thing.

In ICT, they've come apart. The IP is software; it can sit on any server. The work is knowledge work; it's done wherever the human is. Unless, of course, the human is using AI and that AI is sitting in Virginia.

Either way, AI sited outside Ireland will tend to lower our tax base - at a faster or slower rate depending on the industry. What remains clear is that we need a response. Does that mean doubling down and finding a way to build more data centres, whatever the public opposition?

That's not the conclusion we've drawn. The electricity grid won't support a cluster of frontier data centres, and it doesn't have to. AI inference for Irish-located workforces can still run on Irish-located hardware. Not in a series of vast token factories, but on the devices we use as knowledge workers, and inside the premises we operate as organisations.

This is the idea of sufficiency. Local AI is now sufficient for many of the tasks we need it for throughout the day. Those tasks can also be routed intelligently – often to local models, and to frontier models only when they're essential.

There are also many other benefits to this local compute approach. You might expect us to outline them over the coming weeks and months.