Ireland’s Department of Finance has denied a claim by Donald Trump that it intends to slash the rate of corporation tax by over a third.
Yesterday the President told journalists in a speech, “You look at other countries and what they’ve done, and we’re competing with other countries.
“When China is at 15% and I hear that Ireland is going to be reducing their corporation rates down to 8% from 12%.”
In last week’s Budget, Minister for Finance Paschal Donohoe said the Government had no plans to reduce the rate of corporation tax from its current level which, contrary to Trump’s belief, is 12.5%.
“Our position is clear. The 12.5% tax rate is, and will remain, a core part of our offering,” he told Dáil Éireann (Parliament).
A low rate of corporation tax has long been a hallmark of Ireland’s economy and is frequently touted to large multinational companies, such as Google and Apple, as an incentive to relocate.
During his Presidential campaign last year Trump hit out at Ireland, insisting the Republic’s tax regime was costing American jobs.
“Other countries are outsmarting us by giving them advantages, you know, like in the case of Mexico. In the case of many other countries. Like Ireland is, you’re losing Pfizer to Ireland, a great pharmaceutical company that with many, many jobs and it’s going to move to Ireland,” he told the Washington Post in an interview.
He pledged to slash the US corporation tax rate to 15%, down from 35%, although insiders think it’ll be a struggle to push such a big cut through Congress.
Any reduction would likely disincentive US companies from relocating and the Irish Government is keenly aware of this.
"What is underway in the US is something that we need to acknowledge is a development that could have material consequences for Ireland," Donohoe told RTÉ last month. "As they debate what their tax code will look like for decades to come, there are real benefits that we offer something that is understood, certain and credible.”
But it’s not just Trump throwing shade at Ireland’s tax regime: leaders of other EU member states have long hoped to strong-arm the Republic into hiking the tax.
French President Emmanuel Macron is a strong proponent of further EU integration and was elected on a manifesto promise to support a common rate of tax across the bloc.
"If we share a currency and economic integration then we have to share rules about social and systems including harmonization,” his advisor Clément Beaune told the Irish Independent.
Taoiseach (Prime Minister) Leo Varadkar hit back after one meeting where the issue was raised, insisting that, “The point that I made to European leaders was that if we want to foster innovation... the solution is not more taxes and more regulation, it’s actually the opposite.”
The Irish media, usually trenchant critics of Britain’s decision to call time on its EU membership, even reported that the proposals were a “bigger threat to Ireland than Brexit”.