Ibec, the group that represents Irish business, noted the new tax plan launched by US President Donald Trump, which if passed in full, could provide some competitiveness pressure for Ireland, but the implications would be much less serious than if earlier proposals had progressed.
Ibec’s Director of Policy and Public Affairs, Fergal O’Brien, said. “The plan introduced may pose a competitive challenge to Ireland if passed in full but there is still a long road to travel in that process. In recent times we have observed that the mooted Border Adjustment Tax (BAT) would be the most worrying aspect of any potential US tax reform plan for Ireland. It now looks likely that this proposal will not proceed.
“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 per cent; not least that it represents a massive fiscal cost of USD 2 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. The repatriation holiday, on the other hand, is unlikely to have any material impact on investment by US firms in Ireland.
“Today’s announcement is just one in a long line of challenges that Ireland’s economic model has faced in recent years. We have come through previous challenges stronger than ever and we must use every opportunity to champion internationally the depth, diversity and development of the Irish business model. Changes in the international tax environment over recent years have already put a greater focus on the other elements of our mobile investment offering. Domestically, the best response to President Trump’s announcement is to ramp up investment in our education system, increasing our attractiveness to high skilled workers and for government to show much greater ambition in a capital infrastructure programme.”