Tax reform is expected to not only have a transformative effect on the US itself, but also internationally, as US and foreign investors shift more investment to America. And Ireland is one country worried about the impact of the proposed corporate tax cuts and foreign dividend exemption in the US.
Brexit is often identified as the greatest danger to the Irish economy, given its strong commercial links to the United Kingdom. But, with Ireland’s trade and investment links to the United States arguably even more significant, the economic fall-out could be more serious than a hard Brexit.
Statistics attest to how Ireland’s economic fortunes are intertwined with those of US investors. US investment in Ireland totals USD343bn, and while Ireland represents just 1 percent of the European economy, it attracted 20 percent of all US FDI investment to Europe in 2015. Some … Read More »
Many a government has promised to simplify and reform their country’s nightmarish tax code, only to fail to deliver before its time is up. But regardless of that fact, when a government fails to deliver, it deserves to be called out. And this week’s villain of the piece is the Philippines, where businesses have once again been imploring the Government to reform the nation’s dysfunctional tax system.
For its part the Government has frequently assured taxpayers that it is committed to tax reform. But commitment and action are not the same thing, and the lack of action is now showing. The Philippines ranked 126th out of 180 countries in PwC’s Paying Taxes Index 2016. This index tells us that companies have to make 36 separate tax payments, a process taking an average of 193 hours per year. What’s more, the Philippines’ … Read More »
UK Chancellor George Osborne received quite a bit of criticism for his decision to slash the rate of CGT in his most recent budget in March. This is because it was perceived by his opponents as a tax cut for the rich, as it will largely benefit those wealthy enough to invest and to have built up a company. That may be true, but surely the corollary to that is a high rate of capital gains tax will discourage people from investing and building up companies? And what’s the sense in that when economic times are already uncertain? The UK’s business leaders certainly seem to think this was the right move at any rate, with almost 80 percent telling a recent survey that investing in small companies in the UK would be more attractive as a result of the new … Read More »
Ireland likes to be different. Just look at how it has kept faith with its 12.5 percent corporate tax rate when it could have easily caved in to international (but mainly Franco-German) pressure to hike it – effectively keeping its head when all about were losing theirs. This low-corporate tax policy was one of the catalysts for the pre-crash Celtic Tiger economy, and now it is partly responsible for Ireland standing out from other euro area economies, with its remarkable economic recovery. Even Ireland’s crash was different to a certain extent, having been precipitated largely by the over-exposure of its banks to a property bubble that the Government largely ignored, rather than dodgy derivatives that few understood. I just hope that lessons have been learned, and that in future, investors will be encouraged to diversify their egg placement, rather than … Read More »
A couple of weeks ago, India was execrated by me after Cairn Energy announced it had resorted to some serious measures in order to settle a tax dispute, which, according to Finance Minister Arun Jaitley himself, is just one of almost 40,000 cases that were pending before the various income tax tribunals and courts. But, this week, the Government deserves praise for its sensible decision to follow the recommendations of the Shah Committee and not impose the minimum alternate tax on foreign investors retrospectively. Retrospection in the context of taxation is, unfortunately, something that is now associated with India, thanks to the previous Government’s tendency to resort to this unwise policy. It is a reputation that Prime Minister Narendra Modi’s Government is trying hard to shake-off, and it is making slow but sure progress towards this goal, in no small … Read More »
Well, I suppose it would be somewhat remiss not to mention the UK election, which was keenly watched by investors around the world. But really, what was all the fuss about? After all, the result was never in doubt! That is, if you ignored every single opinion poll produced during the election campaign (I wonder if any pollsters will be joining Miliband, Clegg, and Farage in the queue for a new job). Move along, nothing to see here. By the time this blog is published, David Cameron will be a few days into his second term as Prime Minster with a small but eminently workable majority, making all those predictions about unholy alliances and Faustian pacts between parties look like mere scaremongering. In the end though, the Conservatives used scaremongering very much to their advantage in something of a masterclass … Read More »