US President Barack Obama has announced his plan to close a loophole which allows American companies to minimise tax by locating overseas.
In a move which could greatly reduce Ireland's attractiveness as a business base, Mr Obama has proposed taxing US firms' offshore profits.
The proposed $4 trillion budget for 2016 aims to raise $238 billion from a 14% levy on income that US companies such as Apple, Google and Microsoft have offshore to avoid paying US taxes.
That would be close to half of the current 35% top rate companies have to pay on profits returned to the United States.
President Obama also proposed a minimum 19% tax on companies' future offshore profits, without allowing them to defer the payments.
"The budget closes loopholes that punish businesses investing domestically and reward companies that keep profits abroad," the president said in the budget statement.
The receipts from that will be used "to rebuild our aging infrastructure", he said.
The move could reduce the attractiveness of locating business in Ireland, according to a finance expert.
Professor Jim Stewart, Associate Professor in Finance at Trinity College Dublin, said such a move would undo "all of those very careful tax strategies to minimise tax in Ireland".
He added that it underlines the riskiness of Ireland having a tax-based industrial policy.
He said if US and other companies are here for the tax rate, if the "12.5% tax rate is a cornerstone of industrial policy, this is under attack, this is going to be much diminished".
However, he added that US companies here will be looking at the likelihood of these proposals being introduced.
He said it would require approval from the Republican-controlled Congress, which is unlikely, but said the underlying factors that give rise to this still remain and the corporate tax system in the US has been subject to considerable criticism.
President Obama's fiscal 2016 budget also requests $8.8bn to fund US efforts to fight Islamic State militants, bolster Iraq's army and strengthen the "moderate" opposition in Syria.
Documents show about $5.3bn is allocated for the Department of Defense, including money for air strikes, and $3.5bn to the Department of State.
The funds are part of the Obama administration's $58bn request for Overseas Contingency Operations.
President Obama warned Republicans to fully fund the Department of Homeland Security or face putting the nation at risk.
He said his plan to boost programs that helped the middle class were paid for and said it was time to end "mindless" austerity that had capped spending on domestic and defense initiatives.
But his most forceful remarks were aimed at DHS funding, which Republicans are threatening to curtail because of opposition to President Obama's executive order on immigration reform last year.
"If Republicans let Homeland Security funding expire it is the end to any new initiatives in the event that a new threat emerges," he said.
