THE TAX INCENTIVES APPLYING TO US CORPORATE-INVESTMENT IN IRELAND

This paper examines the merits of the 10 per cent manufacturing relief in the context of the Ireland/LTS tax regime. It measures its value as a tax incentive to US Multinationals by calculating the average effective tax rate. This is the tax rate which applies at a given level of economic rent given the complexity of two tax regimes and a system of double taxation relief. It finds substantial corporate tax incentives, however, these incentives are contingent on a variety of factors outside Irish control which are documented in the paper. The uncertain and fragile nature of the effective tax rate may undermine the value of reduced nominal tax rates as incentives to investment.