May vows to cut corporate tax to compete with US
Published 22/11/2016 | 02:30
British Prime Minister Theresa May has pledged to slash the UK's corporate tax rate to the lowest of the world's 20 biggest economies.
To soothe the nerves of businesses rattled by the uncertainty posed by Brexit, Ms May also signalled her government would seek a bridging arrangement with the EU that could allow for new trading arrangements to be thrashed out
Britain has already vowed to reduce its corporate tax rate to 17pc by 2020.
But with US president-elect Donald Trump claiming on the campaign trail that the US corporate tax rate would be cut to as low as 15pc, it has been speculated that Ms May could go even lower.
That would place the UK's rate even closer to Ireland's 12.5pc offering, which has been a cornerstone of our economy and helped attract major employers, including Apple, Pfizer and Google.
Despite the new threat to our competitiveness, IDA chief executive Martin Shanahan suggested he's not concerned by the UK's tax move.
"It underlines what Ireland has known for years and that's part of the offering has to be a competitive regime, but it is only part of the offering," Mr Shanahan told ABC News in Australia.
"There are so many other things that determine why companies invest in countries, whether it's talent, whether it's ease of doing business, access to market is obviously a huge issue. In Ireland's case, there's access to the European market.
"So this is just a further playing out of what we know already in Ireland, which is other jurisdictions are very competitive and we're out there trying to win investment across the globe, (and) they're out there trying to win investment."
Ms May's comments are the latest threat to Ireland's corporate tax offering, coming in the wake of plans by one of Mr Trump's economic advisers.
It is feared the incoming US administration will push ahead with plans to slash its own corporate tax rate, and bring home American companies that have moved abroad.
Asked about the possibility that the United States could cut rates as low as 15pc and whether Britain would match that, Ms May's spokeswoman said any such talk was "speculative".
German finance minister Wolfgang Schauble warned Britain against big corporate tax rate cuts, saying that as long as the country remains part of the European Union, it must abide by its rules.
Ms May's hint of some form of transitional arrangement once the UK leaves the EU pushed the value of sterling up against the dollar, and to its highest since early September versus the euro.
Ms May also told businesses that they needed to keep up their own investment, embrace corporate governance reforms and help spread prosperity across the country.
Elsewhere, Northern Ireland Deputy First Minister Martin McGuinness has said the Assembly should be allowed to give its consent before the UK government kick-starts formal negotiations on Brexit.
He said he would be in favour of members of the assembly passing a "legislative consent motion" before Article 50 on Brexit is triggered.
Mr McGuinness revealed he would support a 'special status' for Northern Ireland as the UK departs from the European Union.
Meanwhile, a report from consultants PwC has found that Ireland's tax system ranks as the most effective in the EU for paying business taxes - and the fifth most effective in the world.
The report covers 190 countries worldwide and looks at all taxes paid by businesses.
Joe Tynan, PwC Ireland's head of tax, said the report confirms that Ireland is competitive on corporate taxes but also on the costs of employing people.