Business Irish

Tuesday 23 May 2017

US considers tax changes that would threaten jobs in Ireland

Economy

Thomas Molloy

Thomas Molloy

THE United States is considering a radical overhaul of the tax system, which would have major implications for multinational companies based here, according to US media reports.

The 'Wall Street Journal' reported recently that the US Treasury may eliminate some taxes on the overseas profits of US multinational companies -- a move aimed at encouraging US companies to repatriate more than a $1 trillion.

The US currently has a global taxation system, which often subjects the overseas earnings of companies to US levies after they have been taxed by their overseas hosts. Most other countries tax domestic earnings but not foreign earnings.

The Treasury plan under consideration would create what officials refer to as a "tough" territorial system, which would shield some overseas profits from US taxes.

The 'Wall Street Journal' said it did not have any more information about the plan, which is still under discussion.

US President Barack Obama is coming under pressure from all sides of the political spectrum to bring jobs back to the US. Republican Party candidate Michele Bachmann said last month during a speech on her economic policies that she wanted jobs created in Ireland to be brought back to the US.

"There are over 600 American companies that have gone to Ireland because of the tax rate. Over 100,000 jobs. I want those 100,000 jobs back in the US," she told supporters.

Mindful of the importance of US multinationals to the Irish economy, IDA Ireland parachuted Kieran Donoghue into Washington two years ago to lobby on behalf of Irish interests.

As it stands, US multinationals can avoid paying tax on profits earned overseas until the money is repatriated to the US. In many cases, they keep the money outside the US to invest abroad, paying no tax on it.

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