The UK has “parked its tanks on the lawn” of Ireland and other European states by announcing its intention to reduce its rate of corporation tax below 15 per cent, according to PWC managing partner, Feargal O’Rourke.

Ireland should, however, adopt a “wait and see” approach before deciding whether to make changes to its corporation tax regime to counter the British threat, said Mr O’Rourke, who heads PWC’s tax practice and is an adviser to many foreign multinationals operating in this country.

“Ireland’s 12.5 per cent rate has become a brand in itself and it has been tested in the fire [of the last recession],” he said.

“If Ireland were to look to adjust the rate downwards, then the whole issue of Ireland’s rate would be open again in Europe.”

More serious

Mr O’Rourke, who also sits on the board of the American Chamber of Commerce in Ireland, said it would be much more serious for this country if the UK planned to go below 15 per cent “in the context of the status quo”.

“But in the context of Brexit, and British attempts to shore up their investment flows and domestic economy, it is too early to say what negative implications this might have for Irish investment.”

Fianna Fáil spokesman for finance Michael McGrath called for targeted measures to retain and enhance Ireland's competitive position.

“The UK has taken a very deliberate policy decision to use tax as a lever to attract new business. Ireland must adapt its offering in the face of this heightened competition.”

Mr McGrath said Fianna Fáil was advocating that the State resist the introduction of a common corporation tax across the EU.

Dublin Chamber of Commerce has called on the Government to help bring Ireland’s key business tax rates in line with the UK.

Chamber director of public affairs Aebhric McGibney said: “We must now concentrate on rolling out the green carpet for business, which will allow us to maximise the opportunities thrown up by a British exit from the EU.”