The Ireland-based US pharmaceutical company is more likely to return profits to the US than close manufacturing plants after Donald Trump accused Ireland of stealing American taxes and jobs, experts say.
Aidan Regan, a professor of political and economics at Dublin University, said the US president is right to call for trade imbalances created by Irish US pharmaceutical companies, claiming that warning signs have been around for many years.
“Trump is right. And what he said was refreshing and honest. I think the Irish government would feel the same way if Irish companies in Ireland are selling all of their products in Ireland, but they ship profits offshore,” he said.
Trump repeatedly aimed at Ireland's success in seducing Big Pharma in his meeting with Ireland Tao Zich by Mishal Martin. “Ireland was very smart. They left our pharmaceutical company with a president who didn't know what they were doing and something so bad happened,” Trump said.
Official data shows that around 50 billion euros (£42 billion) of drugs are exported from Ireland every year, with Regan saying many people “do not touch Irish soil.”
“Without these accounting-based exports, Ireland's trade surplus will be much smaller. The companies may not disappear, but there will be taxable profits,” he said.
He said that the “massive deficit” that Trump was referring to was the result of a practice known as a “profit shift,” in which companies produced drugs in part or entirely in Ireland, but profits were booked there as legal ownership or intellectual property was held in Ireland.
“Up to half of corporate tax stolen in Ireland is volatile and can be argued frankly based on Phantom exports,” Regan said.
He said Trump's team is very aware of this and could save the imbalances caused by the amendments to the US law, tax cuts and employment law introduced in 2018.
“It was designed to encourage many benefits to bring many of that profit back to the US, but in some cases that was the case, but there are many loopholes in the law, meaning it was far more beneficial, especially to transfer more benefits to Ireland.
“Trump and his team are very aware of that and can adjust tax laws to put pressure on businesses. [move] More benefits to the US,” he said.
Successive Ireland ministers have admitted Ireland is vulnerable. Recently in November, then-Taoisiech Simon Harris warned that if three US multinationals were repatriated to the US, they could lose 10 billion euros in corporate taxes.
Official data released earlier this year shows that Ireland received corporate taxes for 28 billion euros last year. This increase coincided with the highly profitable multinationals and “overseeing” valuable IP assets to Ireland.
The country's fiscal watchdog estimates that 75% of all corporate taxes are paid by large multinational companies in the US, with only three companies taking almost 40% of the total.
