In late 2010 and early 2011, the Irish government has been put under repeated pressure by its EU neighbours to increase the rate of corporate tax, which is currently 12.5 per cent on all trading profits.Ireland’s government was standing firm, despite being in receipt of a large cash bailout from the EU/IMF to bolster its banks. As a small open economy, Ireland argues a low tax rate is essential to attract capital investment from major multinationals. From the perspective of large companies like PayPal, Google and Intel, the low tax rate is certainty positive. Similarly, the Canadian government has reduced its corporate tax rate by 1.5 per cent to 16 per cent from January 2011, according to the Wall Street Journal (30 Dec, 2010). The corresponding tax rate in the US is 35 per cent. The low tax rate, coupled with other business friendly policies, has attracted many US companies to move their operations north of the border. A further 1 per cent cut is due for 2012, but commentators are wary of the rate decreases causing an overall drop in revenue for the federal government.

Question
1 Should low tax rates be the sole concern of a business engaging in capital investments? List some other important factors.
2 Should a company consider evaluating investments based on differing tax rates, assuming all other factors being equal?