Irish firms could face Trump tax on payments made from US
IRISH-OWNED companies with operations in the US could be hit with an “excise” tax on payments they make overseas from their American operations under the country’s proposed new tax plan.
While the changes are designed to stop US firms sending profits offshore, it could potentially be bad news for large Irish business with US operations, such as CRH, Kerry and Glanbia.
US House of Representatives Republicans unveiled the long-delayed legislation on Thursday to deliver deep tax cuts that President Donald Trump has promised.
The 429-page bill represents what would be the largest overhaul of the US tax system since the 1980s.
It calls for slashing the corporate tax rate to 20pc from 35pc, cutting tax rates on individuals and families and ending certain tax breaks for companies and individuals.
But it would also impose a 20pc tax on payments made by American subsidiaries of foreign-owned firms, and potentially US firms that carried out so-called inversions overseas.
That raises the question of whether Irish firms with affiliates in the US will fall victim to the tax if they send money back home. “If it is what it looks like it is, then for certain sectors it is bad,” said Peter Vale, tax partner at Grant Thornton.
Americans for Prosperity, which is backed by the politically influential Brothers Koch, is reportedly criticising the plan, calling it a “backdoor border-adjustment tax”.
Congressional passage of the tax legislation that would affect nearly every US company and family was far from certain, and some business groups quickly came out against it.
Contentious provisions will test Republicans, who control the White House and both chambers of Congress, but have been unable to deliver any major legislative achievements for President Trump since he took office in January.
The legislation, called the Tax Cuts and Jobs Act, produces new advantages for rich Americans through lowered corporate taxes.
“This is a very important and special moment for our country, for all Americans.
“Are we going to let the defenders of the status quo win and see our country continue down this downward spiral?” Republican House Speaker Paul Ryan asked.
Meeting with Mr Ryan and other key House Republicans, President Trump told them he was counting on them to maintain the momentum for tax cuts, and repeated his request that Congress send him the legislation to sign into law by the Thanksgiving holiday on November 23.
Ryan McGrath of Cantor Fitzgerald Ireland said that overall the US tax plans are “not a threat to Ireland”.
Mr McGrath said that even the proposed reduced headline corporate tax rate would be higher than Ireland’s 12.5pc rate.
President Trump called the bill an “important step” toward tax relief for Americans.
He added in a statement: “We are just getting started, and there is much work left to do.”
The National Association of Home Builders in America criticised the legislation, saying it would damage house prices and punish homeowners in urban areas.
(Additional reporting Reuters)
It could potentially be bad news for large Irish business with US operations, such as CRH, Kerry and Glanbia