DUBLIN: Irish tax experts have played down the likely impact of US tax reform on Ireland, suggesting the measures currently on the table would not “materially affect ” Ireland’s ability to attract inbound investment. US president Donald Trump is expected to give a broad outline of his tax plan in a speech in Missouri on Wednesday. While the White House and Congress are aligned on the need for tax reform, there is no agreement as yet on the specifics of where to set the country’s headline corporate tax rate, currently at 35 per cent, or how individual tax brackets should be changed. After a string of high-profile policy setbacks on immigration and healthcare, the Trump administration is now desperate to notch a legislative victory. Peter Vale, a tax partner with Grant Thornton, dismissed the likelihood of the US corporate tax rate being reduced from 35 per cent to 15 per cent as has been mooted by Mr Trump. He said that since the administration had dropped plans for a controversial border adjustment tax, a move of that magnitude could not be funded. Mr Trump had originally proposed introducing a tax on imports into the US, which would have threatened investment here by deterring US firms from locating abroad. The measure has subsequently been dropped. Mr Vale said that while there was no consensus on where the headline rate might go, the change was likely to be more modest than previously signalled, perhaps in the mid-to-late 20s.
Deloitte tax partner Declan Butler said Mr Trump had a strong chance of passing tax reform legislation provided the package did not contain big tax cuts for the super wealthy, which might antagonise Democrats. While there has been little bipartisanship in recent years and particularly since Mr Trump’s tenure, Mr Butler said there was broad support for tax reform in both parties on the grounds “it would be good for the economy and good for jobs”. To have any credibility, Mr Butler said the package had to contain a cut in the headline rate of corporate tax. “There’s a fair chance it could be reduced to the low to mid 20s,” he said. On the likelihood of a tax holiday for multinational earnings held offshore, another significant plank of Mr Trump’s agenda, he said it would make political sense to broadly follow the template of the previous initiative. Former US president George W Bush introduced the country’s last repatriation tax in 2004, which allowed companies repatriate overseas earnings at a tax rate of 5.25 per cent. There is an estimated $2.6 trillion in US multinational earnings held offshore, equating to about 14 per cent of the US’s gross domestic product (GDP). A repatriation of even a fraction of this money could act as a major economic stimulus.
