The new tax bill adopted by the United States Senate has raised concerns about the effect on American companies operating in Limerick. A large number of American firms are based in Limerick and they employ a sizeable workforce.
According to IDA Ireland’s website, there are 36 US firms operating in Limerick and 37 in Shannon, mostly concentrated around Shannon Airport. Many of Limerick’s American companies are based in Raheen Industrial Estate and the National Technology Park near the University of Limerick.
IDA Ireland is tasked with bringing foreign direct investment (FDI) into the country.
The controversial new tax bill will lower corporation tax on American companies from 35 percent to 20 percent as part of a push by President Donald Trump and his allies in the Republican Party to encourage economic growth through business investment. Mr Trump has also said he wants companies to move back to the US, specifically mentioning Ireland as one cause of concern.
“The exact implications of US tax reform for Ireland, and the rest of the world, will depend on the exact nature of any changes which are ultimately agreed,” an IDA Ireland spokesperson told Limerick Life.
“Ireland’s membership of the EU is, and will remain, a key factor in attracting FDI from the US and elsewhere. Global business, from the US or elsewhere, will always want to have operations in the EU, and Ireland will remain very competitive and attractive as an EU location to invest in and do business from.”
“Ireland’s corporation tax regime and 12.5% corporation tax rate will continue to be competitive while also offering long-term certainty to international business. As always, we will remain alert and responsive to any changes in the US or global tax environment.”
“We are closely tracking the debate in the US and we continue to engage with business and others to fully understand the potential impacts of any US reform.”
Despite claims by Mr Trump that Ireland plans to slash its corporation tax to as little as 8 percent, Taoiseach Leo Varadkar has categorically denied there will be any change. Ireland’s corporation tax is one of the lowest in Europe and successive governments have been criticised by other nations for keeping it so low.
“While US companies will incontestably have more to consider and weigh up prior to deciding to invest outside of the US following the tax reform package, major US companies will continue to require international operations,” said Dr Gráinne Greahy, Director of Policy at Limerick Chamber.
“Ireland will remain a strong contender as a potential location choice for US companies, relative to other international locations. In addition, the majority of US companies with roots already here are unlikely to leave once US tax reforms are implemented.”
“Even when reduced from 35 per cent to 20 per cent, the US corporate tax rate, coupled with additional state taxes, will continue to be significantly higher than Ireland’s corporation tax rate,” she said.