Govt: Corporation tax rate a 'cornerstone of policy'

The Department of Finance is reiterating its stance on Ireland's corporation tax rate.

It says the low rate, which is seen as key to attracting foreign investment, remains a "cornerstone of Irish industrial policy".

At 12.5%, Ireland's corporation tax rate is one of the lowest in Europe and is one of the main reasons foreign multinationals come and do business in the country.

But yesterday, EU Economics Commissioner Olli Rehn said the Government cannot afford to exclude any tax policy changes in order to get our finances back on track.

That sounded alarm bells for the American Chamber of Commerce in Ireland.

Last night, their president Lionel Alexander urged the Government to "send a very clear message" to the multinational community that there will be no increase in the tax rate.

The Department of Finance said the tax rate is protected in an EU context by "the principal of unanimity" in taxation matters and is a cornerstone of Irish industrial policy.

But the issue is set to be a contentious one with Brussels, as work begins on drawing up Ireland's four-year austerity plan.