Three months away from budget day, it was hard to keep up with the stream of good news related to the presence of American multinationals in Ireland and the tax they pay here over the past week.

First, the US Congress dropped a legislative provision promising punitive retaliatory taxes on the citizens and companies of countries that impose “discriminatory” taxes on American multinationals. Ireland was most exposed to this under the undertaxed profits rule (UTPR) of the OECD-sponsored minimum 15 per cent corporation tax rate agreement.

This country is now responsible for collecting a top-up tax on companies that fail to pay this minimum rate internationally, with the Irish offices of American groups a potential target. But a last-ditch agreement at a G7 meeting on June 28 means that, despite the US consistently refusing to adopt the OECD rules through successive Biden and Trump presidencies, American companies are now exempt from UTPR elsewhere.

The agreed “side-by-side system” is a bet that as long as the rest of the world polices the 15 per cent minimum rate, US multinationals will have nowhere to hide, and mutual enforcement threats are unnecessary.

Then on Wednesday, the IDA published upbeat figures for the past 18 months, including a 37 per cent year-on-year increase in the number of inward investment projects in the first half of this year to 179. IDA chairman Feargal O’Rourke said he was surprised by how well the figures were holding up in turbulent times, driven by the White House’s agenda.

“While one swallow doesn’t make a summer, it’s still nice to see a swallow,” O’Rourke said, adding the agency was “cautiously optimistic” from talks with multinationals. “It’s really coming back to us from clients now that, in a very turbulent world, Ireland is an oasis of stability, really does stand out, and it is something that is really playing to our strengths at the moment.”

There were the usual caveats. The IDA warned of a potential dip in FDI job creation in the second half of this year as more economic headwinds from the Trump administration take effect. Enterprise minister Peter Burke said: “We’re very clear that foreign direct investment won’t come on yesterday’s terms. We need to really be very sharp as an economy and we need to really chart a very strong way forward to make our value proposition really strong for investment to come into our economy.”

Budget bellwether

The next day, Burke’s finance colleague Paschal Donohoe presided over yet another record Exchequer figures presentation. Every single tax revenue stream was up in the first half of this year, bringing in €47.4 billion, up €3 billion or 6.7 per cent (excluding collections on the Apple court case).

Half of this increase came from the corporation tax take in June alone, which hit an unprecedented €7.4 billion. This is the month when large companies with an accounting year ending in December (ie the majority) pay the first half of their tax. They can align this prelim payment on last year’s profit, or on forecasts for this year if they expect a big change. It now looks like the only change they expect is upwards.

Most of these funds come from US multinationals – except some of the largest (notably Apple, Microsoft and Pfizer), which use different dates. Unlike May, when monthly corporation tax collections dropped by €1 billion because of a drop in Pfizer’s profits, June is a representative bellwether for this revenue stream. It has consistently been repeated and amplified in November, when the same companies make their second prelim payment. 

Donohoe used the month-on-month reversal of fortune to deliver a customary warning about “the extreme volatility in this revenue stream, and of its inherent unsuitability as a basis for permanent spending commitments”.

The reality is that regular corporation tax (again, excluding the Apple court decision) is now on course to exceed the Budget 2025 forecast of €27.6 billion and blow past the €30 billion mark by the end of this year.

A big beautiful bill for the green jersey

Just hours after the publication of Exchequer figures, the US House of Representatives took the final vote to pass President Donald Trump’s One Big Beautiful Bill. Eleventh-hour negotiations within his Republican ruling party, while heavy on the fiscal aspects, did not affect multinational taxation measures settled in the Senate earlier in the week.

They cement the green jersey tax structure introduced on a temporary basis by the previous Trump administration and now adapted to the new 15 per cent international reality, illustrating the formidable lobbying power of corporate America in Washington.

Under Trump’s 2017 Tax Cuts and Jobs Act, US multinationals could, until this year, pay a reduced effective rate of 13.1 per cent on “global intangible low-taxed income” (Gilti), i.e. profits generated from intellectual property located in jurisdictions like Ireland. This was closely aligned with the 12.5 per cent corporation tax rate applicable here at the time.

The Gilti rate was due to rise to 16.4 per cent next year, exposing profits taxed in Ireland to a top-up liability in the US and reducing the incentive to base business here in the future. But the Big Beautiful Bill has just reduced this to 14 per cent, permanently. In the process, Gilti has seen its name change to the much less fun “net CFC tested income”.

Although tweaks to the deductibles allowed under this regime may have an impact, setting the Gilti rate below the 15 per cent now applicable to multinationals in Ireland means they are very unlikely to pay any additional US tax on the profits they declare here in the future. 

Those who maintain commercial operations outside the US but declare the slice of profits based on intellectual property back home – such as Google and Meta with their Dublin international headquarters – can now also continue to enjoy a reduced tax rate of 14 per cent under the separate “foreign-derived intangible income” (FDII) regime.

US companies are welcome to continue their conquest of global markets from their Irish low-tax bases.

Despite Trump’s vocal (yet-to-be-confirmed) tariff threats, the message from his tax legislation is very much that US companies are welcome to continue their conquest of global markets from their Irish low-tax bases – indefinitely. 

One exception concerns bricks-and-mortar factories and labs, with new incentives like bonus deductibility of such physical investments and R&D expense against tax if they are built in the US. While this may affect some projects located in Ireland until now, such as pharma or microchip plants, companies will look at the overall tax effect of any location, with the long-term intellectual-property component of such high-tech developments weighing heavily on the equation.

As for tax incentives for tangible investments, they can always be matched as needed. The trend at EU level is to compete again for industrial and tech investment, suggesting a relaxation of state aid rules in this direction.

To round off the week, the American Chamber of Commerce Ireland marked US Independence Day on Friday with a survey of its multinational members indicating that 68 per cent had plans to invest in this country in the next five years. Some 60 per cent said they planned to increase their Irish workforce in the coming year, and another third would maintain existing employee numbers.

The Trump administration’s mammoth fiscal and policy piece of legislation is terrible news if you’re an American dependent on state support for food aid or healthcare, or an immigrant facing deportation by heavy-handed agencies now supercharged with additional funding. It poses a serious threat to the future of the US economy if you’re worried about the federal deficit and long-end bond yields, as Peter explained recently.

But for an Irish Government looking at its fiscal horizon, the news is as good as it could possibly be. Its main difficulty going into budget season is again going to be: What to do with all this US multinational money?

*****

Elsewhere this week, Hannah returned from Dubai with a series of articles following the Irish expats who are chasing their business dreams in the Middle East. In part one, she met young estate agents attracted by the Emirati property boom.

I visited Carbery Group’s CEO Jason Hawkins and CFO Liam Hughes in Ballineen, Co Cork to understand how the farmer-owned dairy processor became one of Ireland’s most profitable, despite its relatively small scale. They explained why it has no plans for consolidation nor for an IPO.

Byron examined Ireland’s membership of the European science body Cern, for which the Government has just secured funding approval. He looked back on the technology and business benefits generated by established member countries over the years, drawing lessons on how best to leverage the move.

The Maritime Area Regulatory Authority was established two years ago as the new gatekeeper to Irish waters. Offshore wind developers are just one group of sea users knocking on its founding CEO Laura Brien’s door, she told Alice in an in-depth interview.