Business World

Sunday 18 March 2018

US corporate taxes to fall but experts say that Ireland is safe

Donal O'Donovan

Donal O'Donovan

BARACK Obama wants to slash his country's high corporate tax – by more than a quarter in some cases – to boost jobs.

The news will raise concerns that Ireland could lose out if US firms are encouraged to increase investment at home at the expense of expansion here, as a result of the move.

However, experts say this country should weather even a significant US tax cut.

President Obama, pictured, was due to announce his "grand bargain for middle-class jobs" in a speech at a new warehouse in Tennessee late yesterday but the details were circulated well in advance.

The tax cuts are part of a plan to break a budget deadlock between Democrats and Republicans in Washington by putting together a package of measures, including lower taxes – to appeal to the political right – and measures aimed at job creation to appeal to the US left.

Mr Obama also wants to change the tax rules on foreign earnings in an effort to get companies to bring overseas profits back to the US, minimise corporate tax avoidance and lower the use of off-shore tax havens.

For Ireland any changes to the US tax regime will be the most closely watched aspects of the wider plans.

Professor Ron Davies, an expert in foreign direct investment at UCD, said Ireland had little to fear from the US plans in part because the political system there was too gridlocked to pass the necessary laws.

"First of all, as an American I don't think its going to happen. I think there is no way the Republicans will do it," he said.

"Even if the US cuts its tax rate Ireland will remain highly attractive as an investment location for US firms," he said.

US tax changes may impact highly structured financial investments here, but not the productive activity associated with jobs, according to Mr Davies.

"Tax is only part of what makes Ireland attractive and will remain lower here than in the US.

"I'm absolutely optimistic that Ireland will continue to be a big part of US foreign direct investment," he said.(Additional reporting Reuters)

Irish Independent

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