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Govt reacts to Obama's Irish tax claim

Friday, July 25 12:31:57

Minister for Jobs, Enterprise and Innovation Richard Bruton today said that the Irish Government encourages real investment in Ireland, not the tax inversion scheme slammed by the US President last night.

"The Government, my Department or our enterprise agencies do not promote or encourage companies to engage in any practices which bring little or no substance, in terms of jobs or economic activity, to Ireland. The 'tax inversion' practices referred to in recent days and weeks are not the product of any features of our tax system, we are not in favour of them and do not promote or encourage them. Ireland features in only a small minority of these cases worldwide, which also relate to a range of other developed countries," he said.

"As part of our recovery strategy, we will continue determinedly to promote Ireland as a location for substantive multinational investment and jobs based on our track record, our talent pool, our technology capabilities. Our low, stable, transparent, statute-based corporation tax rate is one part of this strategy and we are absolutely committed to that rate. We are convinced that by continuing to implement our plan we can continue to rebuild our economy and attract the investment and job-creation we need," the Minister added.

His statement comes after US President Obama last night slammed US multinationals who use so-called tax inversion scheme to re-domicile outside the US for tax purposes, singling out Ireland as a "tax inversion" destination.

He criticised US firms for "gaming the system" by relocating their headquarters to countries such as Ireland where corporate tax rates are lower to avoid taxes in the US, where the corporate rate can be as high as 35pc compared to Ireland's 12.5pc baseline rate.

In his administration's most high-profile attack on a practice known as "inversions" that more and more US companies have recently used to reduce their taxes, Mr Obama said in a speech in California that US corporations were exploiting an "unpatriotic tax loophole" by moving their head offices overseas in takeovers of smaller foreign companies.

The president, in an interview broadcast later on the business news TV network CNBC, named Ireland as a location that US companies are using to take advantage of "technically legal" tax arrangements.

For more see: www.businessworld.ie