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Morning Note: Corporation’s Irish Tax Luck To Run Out?
CNBC.com | March 17, 2011 | 11:43 AM EDT

St. Patrick’s Day is a celebration of all things Irish. For U.S. multi-national businesses, it may well be a day to toast Ireland’s corporate tax rules.

Ireland has one of the lowest corporate tax rates in the Western world – 12.5%. That’s compared to corporate rates between 30% and 34% in Germany, France, and Belgium. The top marginal U.S. corporate tax rate is nearly triple Ireland’s at 35%.

Moreover, Ireland’s relatively lax tax rules regarding the transfer of paper assets have long been a gold mine for U.S. companies. Tech giants such as Google have saved billions by using what corporations call “The Double Irish Arrangement” – a process by which companies funnel money through Irish holding companies to capitalize on Ireland’s generous tax structure.

But corporations’ Irish luck may soon run out. After bailing out the nation to the tune of $113 billion, the European Union is demanding Ireland raise its corporate taxes, bringing them in line with the rest of Europe. This week, the EU proposed a new tax system called the “Common Consolidated Corporate Tax base” that would essentially prevent EU countries for setting their own tax rate.

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