Ibec, the group that represents Irish business, today stated that while the new tax proposals due to be announced by US President Donald Trump may pose some competitiveness pressures for Ireland, they also provide opportunities and ultimately, due to tax and other considerations, Ireland will continue to remain a very attractive location for US investment. The group noted that US tax reform is just one of many changes to the international tax environment in recent times and emphasised the importance of ensuring our attractiveness to Foreign Direct Investment (FDI) continues to be protected and enhanced.
Ibec's Director of Policy and Public Affairs, Fergal O'Brien, stated. "The plans proposed by President Trump to reform the US corporate tax system and to introduce a new system of taxing overseas profits may result in competitive challenges to Ireland if passed in full. However, US firms will still find Ireland a compelling investment location, thanks to the strong business substance behind our economic model and the multi-faceted measures we have on offer to attract inward investment.
"Fundamentally, the majority of US firms use Ireland as a gateway to access the EU and other international markets. This will remain the case no matter what the US tax rate is. Our corporate tax rate of course remains important in the competition with other investment locations, but it is only one of a suite of measures that we have on offer, such as education and our talent pool, ease of doing business and, cost competitiveness, all of which influence over-all investment decisions by businesses when it comes to choosing a location.
“Other elements of the strategy due to be announced today, such as the proposed repatriation holiday and a move to a territorial tax system, contain some opportunities and potential threats for Ireland. The repatriation holiday is unlikely to have any material impact on investment by US firms in Ireland and indeed may significantly boost the space for investment by US multinationals abroad over the short-term. The impact of a move to a territorial tax system on the other hand will very much depend on the detail. It will be important to monitor how some of the provisions of this new system interact with our corporate tax regime.
"Ireland will continue to face significant challenges in protecting its FDI model from various proposals, particularly those emanating from Europe in recent times. 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 increase investment in our education system and in our research and development capabilities, so that we continue to attract highly-skilled workers to Ireland, and for the Government to show much greater ambition in Budget 2018 to ramp up spending on critical infrastructure projects."