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Irish Firms Unfazed By US Tax Reform Plans

by Jason Gorringe,, London

28 April 2017

Irish business group Ibec has said that US President Trump's tax reform package could put some pressure on Ireland's international competitiveness, but would be less damaging than earlier proposals such as a border adjustment tax (BAT).

The Trump administration this week announced plans to lower the business tax rate from 35 to 15 percent. According to Secretary of the Treasury Steven Mnuchin, "We will make it [the tax system] a territorial system. We will have a one-time tax on overseas profits, which will bring back billions of dollars that are offshore to be invested here in the United States to purchase capital and to create jobs."

Commenting on the announcement, Ibec's Director of Policy and Public Affairs, Fergal O'Brien said: "There will be plenty of obstacles to overcome to reach implementation stage of the proposal to cut the US headline corporate tax rate to 15 percent; not least that it represents a massive fiscal cost of USD2 trillion over its first ten years. Even if the US succeeds in delivering a substantial rate cut, the proposition for US firms to invest in Ireland remains compelling."

"Fundamentally, the majority of US firms use Ireland as a platform to access the EU and other international markets. This will remain the case no matter what the US tax rate is. Our tax rate remains important in the competition with other investment locations but clearly it is only one of a number of factors, such as talent, ease of doing business, and cost competitiveness, which influence investment decisions."

O'Brien noted that it looks likely that the US will not proceed with a BAT, which he said had previously been regarded as "the most worrying aspect of any potential US tax reform plan for Ireland." He added that the proposed repatriation holiday is "unlikely to have any material impact on investment by US firms in Ireland."

O'Brien argued that the Government should respond to Trump's announcement by increasing investment in the education system, improving Ireland's attractiveness to high skilled workers, and show more ambition in investing in a capital infrastructure program.

TAGS: tax | investment | business | Ireland | offshore | education | tax rates | United States | tax reform

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