Four technology giants have warned the Irish government not to touch Ireland's low corporation tax levels as the country struggles to finalise a bailout package with the International Monetary Fund and the European Union.
Ireland will borrow around £85bn - the exact amount will be agreed in coming days – to underwrite its banks. But HP, Intel, Microsoft and Google have warned that the country's low company tax levels are key to any economic recovery.
Speaking last week, the American Chamber of Commerce Ireland warned that the country's 12.5 per cent corporation tax was crucial to its competitiveness.
Lionel Alexander, VP HP manufacturing and president of the American Chamber of Commerce in Ireland, said: "Any increase in corporation tax will have a damaging impact on our ability to win and retain investment in Ireland. The simple truth is that Ireland's corporate tax rate is not the most competitive in the world. When we compete for jobs and investment we are competing not against the European Union, but against countries such as Singapore, Israel, India and China."
The statement was supported by Intel Ireland, Microsoft and Merrill Lynch. US tech firms played a crucial role in securing Ireland's reputation as the Celtic Tiger economy by bringing manufacturing and support jobs to the country.
Separately Google, with a 2,000-strong European headquarters in Dublin, told the Belfast Telegraph: "Anything that impinges on Ireland's competitiveness is going to be a big thing for Google, including corporation tax. And anything that increases the cost-base of a business is negative for competitiveness."
The Irish finance minister Brian Lenihan has made clear corporation tax will stay at its current low level.
But the decision might not be his to take - any loan from the EU or the IMF will come with tough conditions attached on government spending and tax policy. ®