Ireland to escape Obama crackdown, says Cowen
TAOISEACH Brian Cowen insisted yesterday President Barack Obama is not targeting Ireland in his crackdown on multinational companies.
Mr Cowen said the US president had made it clear Ireland was not being used by firms seeking to use their overseas offices for fiscal purposes.
The comments come amid fears for thousands of jobs in US companies based in Ireland.
Ireland's 12.5pc tax rate is a third of the US corporate tax rate, attracting companies such as Microsoft, Google and Wyeth to Ireland.
At present US multinationals can avoid paying tax on profits earned overseas until the money is returned to the US.
In many cases these companies keep the money outside the US to invest abroad which means they never pay taxes on it.
However, Mr Obama is seeking to sharply limit the tax deductions which companies taking advantage of deferral can take. The firms will still be able to defer paying US tax on profits earned overseas, but will not be able to claim tax deductions in the US for expenses related to their foreign operations.
The plans have yet to be passed by both Houses of Congress in the US.
Labour Party leader Eamon Gilmore yesterday queried if discussions had taken place about the proposed changes to the US tax regime.
When the president was elected, he pointed out, there had been concern that changes in the US tax regime would have a negative impact on US companies investing in Ireland.
"On my first meeting with President Obama last year, he made it clear when I raised this issue that he does not regard Ireland as being among the countries he would have in mind," Mr Cowen replied.
"He was talking about those where people name-plate their operations and use such jurisdictions for fiscal purposes."
Mr Cowen said there was a considerable legislative process going on at present to bring in the plans.
But he said Irish officials would be in close touch with senators and members of Congress to ensure there was a clear understanding of Ireland's position.
"We are totally compliant regarding all international tax treaties," he said.
"We will also use the opportunity to emphasise the level of cross-investment between Irish-owned companies in the US."
There are 227 Irish companies with operations in the US, employing more than 81,000 people across 2,630 US locations.