Claire Healy, Tax Partner, Forvis Mazars: Following President Trump’s return to the Oval Office, his attention will turn to the reduction of the federal corporation tax rate. He started this work in his first term, reducing the federal rate from 35% to 21%, with the passing of the Tax Cuts and Jobs Act (TCJA). Following his inauguration, President Trump announced that the United States would not be adopting the BEPS 15% global minimum tax. Instead, he is looking to reduce the federal corporate tax rate to 15%.

It is a common occurrence across OECD countries that there is a correlation between the reduction in tax rates and the increase in revenue. A prime example of this is Ireland. Hoping to emulate the success that Ireland had in the 1990s with regards to economic growth and job growth, President Trump is eager to benefit from both higher corporate tax revenue and also to use this reduced federal rate to improve the US balance of payments. This was a cornerstone of Mr Trump’s election campaign, as well as protecting and growing American jobs.

With the potential for the reduction in the federal corporation tax rate, as well as increasing tension between the US and the EU, with talks of tariffs being imposed in the US, Ireland will need to stress the benefits of cooperation when it comes to tax matters, for companies based in both Ireland and the US. With so much of Ireland’s corporation tax generated by multinationals based in Ireland (the top 10 multinational companies account of over 50% of Ireland’s corporate tax receipts), as well as the payroll taxes paid by employees of these companies (50% of overall payroll taxes receipts), maintaining the presence of these companies in Ireland will be key to safeguarding Ireland’s economic wellbeing.

Peter Reilly, Tax Policy Leader, PwC Ireland: First of all, the ability of the new US administration to enact a cut in the federal corporation tax rate from 21% to 15% is laden with difficulties. The US federal fiscal outlook has changed considerably since 2017 when the Tax Cuts and Jobs Act was enacted. In that time, the Debt to GDP ratio has risen from 77% to 101% and the annual deficit has almost tripled to $1.9 trillion. In addition, the narrow Republican majorities in the House and Senate could complicate the ability of Republican Congressional leaders to extend Tax Cuts and Jobs Act (JCJA) tax provisions and enact all of President Trump’s campaign proposals and reduce the federal corporate tax rate.

It is also important to note that in choosing locations in which to invest, tax is but one of many factors which multinationals consider. Ireland’s long established track record of political stability, tax certainty and a pro-business agenda remains hugely important to our competitive offering. In addition, Ireland, as the only English-speaking country in the European Union, continues to serve as the perfect gateway for US multinationals who wish to transact in Europe. Our highly educated workforce, attractive tax regime and global connectivity also serve to enhance Ireland’s competitive offering further.

Multinational companies typically make strategic plans in long-term cycles and would therefore be unlikely to deviate too drastically from their long-term strategies which are expected to span numerous electoral cycles. If Republicans were to lose control of Congress following the 2026 Congressional elections, then the Trump administration’s legislative agenda could be significantly hampered. It is clear that these matters remain in a state of flux, and therefore multinationals may wish to adopt a wait-and-see approach rather than rush into action following an announcement from the Executive branch.

Of arguably greater concern to Ireland is the threat of tariffs. President Trump has most recently threatened to impose 25% tariffs on the European Union, although the extent of these are as of yet unknown. Ireland’s goods-trade surplus with the US, amounting to approximately €70bn, is expected to be a feature of Ireland-US bilateral discussions over the course of the new US administration, who view trade deficits as contrary to the best interests of the US. The imposition of blanket 25% on Irish exports would render them less attractive in the US market and potentially weaken Irish economic output. President Trump may also use the threat of such tariffs as a bargaining tool to lure US manufacturing companies back home. US tariffs on all aluminium and steel imports (including the EU) come into effect from 12 March at a rate of 25%. Further tariffs of this ilk could have a significant negative impact on a small open economy like Ireland.

This article appeared in the March 2025 edition of the Irish Tax Monitor.