The president of the American Chamber of Commerce in Ireland said recent media reports of abuse of low corporation tax rates misrepresented the true situation and were potentially damaging to Ireland's reputation as a location for foreign direct investment.
Speaking at the chamber's annual Thanksgiving lunch today, Eoin O'Driscoll said the protection of Ireland's 12.5 per cent corporation tax rate must be a key objective not just for those in Government but for all political parties.
"Ireland's taxation regime stimulates investment here and maximises revenue to the exchequer. Any changes could have far-reaching consequences and could negatively impact on our ability to generate and sustain wealth in Ireland" he said.
The EU Commission is expected to unveil plans for an EU-wide corporation tax system that it claims will increase transparency for firms operating across Europe.
Tax competition across Europe has intensified since a number of former Eastern Bloc states introduced flat income taxes and negligible corporate taxes to attract overseas investors.
Mr O'Driscoll said: "The core issue for the EU is the choice between a 'one size fits all' harmonised system or a competitive dynamic flexible system.
"Any suggestion that our rate of corporation tax may be coming under threat internally, not to mind at EU level, will only serve to undermine those who are working to attract further investment in the country. All political parties must put the protection of our corporation tax rate at the heart of their policies," he said.
Ireland's generous corporation tax system has also attracted the attention of US authorities who have been irked by the amount profits booked by US companies operating in Ireland.
Multinationals will try and book profits in low-tax countries and expenses in high-tax countries to lower their overall tax bill.
Mr O'Driscoll welcomed previous statements by Minister for Finance Brian Cowen that Irish tax rates were non negotiable and said that investors required certainty on the issue.