IDA chief executive Michael Lohan has said he does not believe the US’s decision to withdraw from the global tax deal poses a “significant threat to Ireland”.
In a blizzard of executive orders signed after his inauguration, US president Donald Trump said the agreement, which requires multinationals to pay a minimum rate of tax of 15 per cent regardless of jurisdiction, would have “no force or effect” in the US.
Given the size and importance of the US economy, the move effectively scuppers the deal which was brokered by the OECD (Organisation for Economic Co-operation and Development) and signed up to by more than 140 countries including the US. However, the US Congress never approved the measure.
Speaking to The Irish Times on the fringes of World Economic Forum in Davos, Switzerland, Mr Lohan conceded the US’s move would “require a revision of the OECD process”.
“Trump’s order is undoubtedly going to lead to further negotiations on international tax and over the course of the next year we’re going to see that intensify. But I do think we’re going to see agreement on this because ultimately companies need to trade internationally . . . and a fundamental component of that is tax certainty,” he said.
A crux issue for the US is the “top-up” tax that countries including Ireland can apply to companies paying a headline rate that is lower than the 15 per cent minimum. This is seen by Washington as disproportionately affecting US companies.
Trump’s treasury nominee Scott Bessent said last week that following through with the global minimum tax deal would be a “grave mistake”.
Mr Lohan said he did not foresee an exodus of FDI [foreign direct investment] companies from Ireland as a result of Washington’s pivot on tax “as the Irish operations [of these companies] are at the core of their global supply chains”.
While “the quantum” of global FDI had slowed in the last 24 months, he said Ireland retained a competitive offering in terms of tax, talent, business-friendly environment and political stability.
He noted that Ireland secured 234 “investment wins” last year and that FDI companies now employed a record 302,566 people in the Republic.
On the prospect of US tariffs, Mr Lohan said there appeared to be more “balance” in the US narrative around the use of these measures.
“It seems to me from the early hours and days of the [US] administration that the use of tariffs is probably going to be targeted and not as widespread as first thought,” he said.
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Up to 50 top executives were expected to attend the IDA-hosted dinner in Davos on Wednesday evening. Last year former taoiseach Leo Varadkar sat beside OpenAI’s Sam Altman.
The agency will next month, with Government approval, publish a new five-year plan following an 18-month long strategy review. Mr Lohan said part of the strategy would be a continuation but there would be a new focus on what he said were the four key drivers of global FDI growth: AI (Artificial Intelligence)/digitalisation; semiconductors; the green economy and healthcare.
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