IDA welcomes US u-turn on border adjustment tax

The IDA has welcomed a decision by US policymakers to abort plans for tax reform that threatened Irish exports to the country.

Republicans announced they would scrap plans for a US border adjustment tax, an element of which was a levy on imports.

This would have hit Irish exports to the US with potentially serious consequences for the many US manufacturers based here. Some 70 per cent of IDA client firms in Ireland are American and the plans would have had consequences in particular for the medical devices and pharmaceuticals sector.

It also threatened to undermine companies’ desire to base themselves in Ireland with the incentive of a 12.5 per cent corporate tax rate.

In a statement on Friday, IDA chief executive Martin Shanahan said Ireland would continue to win business despite unpredictable political developments around the world.

Noting the US decision to set aside the border adjustability tax proposal he said Ireland was a small, open globalised economy from where clients could conduct trade globally.

“IDA Ireland continues to win business despite the changing commercial and political worlds around us, helped in no small way by Ireland’s consistency and stability in the areas of taxation,” he said in a statement.

“Investors crave certainty and Ireland is providing that for them right now. Ireland remains stable and consistent in policy terms, which is a major plus when it comes to attracting investment.”

Republicans are, however, still expected to consider how to lower US corporate tax rates later this year, another policy which will keep Irish attention focused.

The aborted border tax policy also posed a long-term threat to foreign direct investment out of the US to countries such as Ireland as it would have provided a tax incentive for companies to export from the US rather than establishing plants overseas.

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