Trump's tax reforms hit US investments in Ireland
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Live at 3:30 p.m. ETEdmund HeaphyIreland CorrespondentYahoo Finance UK
US investment in Ireland declined by â¬45bn ($51bn) in 2017, in another sign that sweeping tax reforms introduced by US president Donald Trump have impacted the decisions of American multinati onal companies.
The withdrawal of US investment, combined with a â¬16bn drop in UK-based investment, meant that Ireland saw a steep â¬54bn decline in foreign direct investment (FDI) last year, data released on Thursday shows.
Economists have been warning that both the UKâs impending departure from the EU and Trumpâs overhaul of the US tax code, which aimed to reduce the use of foreign low-tax jurisdictions by US companies, would dent inward investment in Ireland.
âThe fall in US foreign direct investment is clearly caused by uncertainty around US tax reforms and by uncertainty around the precise form Brexit will take,â said Stephen Kinsella, an economist at Irelandâs University of Limerick. âInvestors concerned by either, or looking to benefit from either, would keep their powder dry and their money at home.â
READ MORE: Irelandâs economy seems to be in rude health, so why is everyone so pessimistic?
While the reforms w ere only introduced in December 2017, the change to the minimum rate of effective tax on payments between US corporations and foreign subsidiaries had long been mooted by the Trump administration.
In November 2017, Trump went so far as to single out Ireland, saying it was one of several countries that corporations used to offshore profits.
âFor too long our tax code has incentivised companies to leave our country in search of lower tax rates. It happensâ"many, many companies. Theyâre going to Ireland. Theyâre going all over,â he said.
Figures released by the US treasury department in August revealed that Irish-based entities saw a dramatic decline in their holdings of US treasuries, as did those from several other low-tax jurisdictions. Ireland had been the third-biggest holder of US treasuries, after China and Japan.
Irish tax laws have been under significant international scrutiny for several years. In 2014, the countryâs government moved to clos e a loophole that gave rise to a tax avoidance structure known as the âdouble Irish,â which allowed companies to transfer income to Caribbean tax havens.
READ MORE: Controversial âsingle maltâ tax avoidance structure still in use in Ireland
In June, the Irish finance ministry was forced to rebuff a study that claimed Ireland was the worldâs biggest tax haven. And in September, Ireland collected â¬14.3bn ($16.4bn) in unpaid taxes and interest payments from Apple (AAPL), following a 2016 European Union ruling that said tax benefits provided to the company amounted to illegal state aid.
While 2016 saw a much sharper declineâ"of â¬123bn ($140bn)â"in US investment in Ireland, it was offset by increased investment from Europe.
Meanwhile, outward investment by Irish-owned companies in 2017 decreased by â¬96bn, to â¬717bn.Recently ViewedYour list is empty.
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