Joan Burton (Dublin West, Labour)
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186. To ask the Minister for Finance the analysis his Department has undertaken in respect of the United States of America Tax Cuts and Jobs Act 2017 regarding the new US legislation's provision relating to base erosion and anti-abuse tax; its impact on Irish foreign direct investment from the United States and impact on the Exchequer's corporation tax receipts; and if he will make a statement on the matter. [36955/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware, the base erosion anti-abuse tax or "BEAT" is an anti-avoidance measure that applies to very large companies ($500 million of sales in the USA per annum) who make large payments to foreign related companies.  It works by requiring the company to re-calculate its entire US tax bill to see what it would pay if it were subject to a 10% tax rate but all deductions for payments to related foreign companies were denied.

Much of the detail of the proposed changes remains to be clarified in US IRS and Treasury regulations and questions remain particularly regarding the compatibility of some aspects of the reforms with WTO rules and other international obligations, and until these issues are clarified it is not possible to estimate any potential Exchequer impact.

The BEAT and other reform measures reduce the ability of multinational companies to erode the US tax base. To the extent that the US rules prevent companies from achieving globally low effective tax rates, this change is to be welcomed.

Naturally, US tax reform is of great interest to Ireland given the large volume of US investment here.  Foreign Direct Investment has been a key contributor to Ireland’s economic development and growth.  It has provided rewarding employment for over 300,000 people directly and a transformation of the enterprise base in Ireland.

The level of investment from the US into Ireland cannot be attributed just to corporate tax policy – that is not a fair reflection of the many other reasons that companies choose to locate in Ireland.

Factors such as availability of physical and technological infrastructure, availability of skilled staff, access to the EU market as well as culture and quality of life are also significant and important considerations.

US business 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. US multinationals locating real substantial activity in Ireland will continue to be subject to Irish tax at 12.5% on their profits properly attributable to activity located in Ireland.

BEAT and other measures have been critically received internationally, by the OECD, European Commission and larger EU Member States.

The Department of Finance, and the Irish Embassy in the US, will continue to monitor the situation regarding US Tax reform and will continue to engage with business and others to fully understand the potential impacts of the changes in the US.