Analysts in Ireland have suggested that a provision contained in the recently signed American Jobs Creation Act providing a one year tax holiday in order to encourage US multinationals to repatriate profits held abroad by reducing the tax rate to 5.25% is likely to have an adverse impact on the Republic's economy.
The US authorities hope that the move will encourage the repatriation of some $350 billion in profits held by US companies abroad.
However, in a report cited by the Irish media this week, Morgan Stanley revealed that among the firms which lobbied for the tax break during negotiations on the legislation are important technology investors in the Republic, such as Dell, Intel, and Hewlett Packard.
The investment bank went on to suggest that firms affected by the temporary US tax reduction are likely to reduce the amounts that they invest in Europe as a result.
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