UK Chancellor George Osborne is planning to cut corporation tax to less than 15% as part of a plan to give Britain a post-Brexit vote boost.
Mr Osborne said the UK must show it was "still open for business" following the decision to leave the EU as he set out plans to create a "super competitive economy".
Slicing more than 5% off the current rate would see Britain close in on Ireland's 12.5% levy and make it one of the most competitive global economies.
Mr Osborne told the Financial Times: "We must focus on the horizon and the journey ahead and make the most of the hand we've been dealt."
The Chancellor wants to focus on generating investment from China as well as ensuring support for bank lending and maintaining the UK's fiscal credibility to shore up the economy following the shock referendum vote.
Mr Osborne, who had threatened tax and spending cuts through an emergency budget if Britain voted to leave, said he would wait for official forecasts before announcing any new measures.
He said Britain faced a "very challenging time" and urged the Bank of England to use its powers to avoid "a contraction of credit in the economy".
Chief executive of the TaxPayers' Alliance Jonathan Isaby urged the Chancellor to "be bold and cut the rate to 10% as soon as possible to really demonstrate that we are open for business".
A former chancellor and foreign secretary, meanwhile, warned that striking a trade deal before beginning transitions to leave the European Union would be a "massive strategic error".
The next prime minister must issue orders in Whitehall for preparations to be made for the UK to leave "swiftly and smoothly", Nigel Lawson and David Owen said.
Conservative Lord Lawson and independent Social Democrat Lord Owen said laws enabling the UK to quit should be on the statute book by Christmas, ready to be used when needed.
But Britain could leave under its own laws "if no acceptable agreement is forthcoming", they said.
Reacting to Mr Osborne's comments, Minister for Finance Michael Noonan said he had suggested Britain would cut corporation tax at a recent meeting of the Oireachtas Finance Committee.
He said it may not be dramatic, as Mr Osborne had previously suggested a cut to 17% by 2020 two years ago.
Mr Noonan said 15% is not a million miles away from that. He said there were implications for Northern Ireland which had campaigned to reduce corporation tax to 12.5%.
He added if England, Scotland and Wales reduced their rate there would not be much of an advantage to Northern Ireland.
Asked if the corporation tax reduction in Britain was a threat as suggested by Minister for Transport, Tourism and Sport Shane Ross, he said Brexit is a threat.
He said the big issue will be what the final settlement will be. He added that if the single market is maintained it will not affect Ireland as much.
Minister for Public Expenditure and Reform Paschal Donohoe this morning said that he was concerned at the UK's plans, describing it as a stark reminder of how the world was changing following the Brexit referendum.
Mr Donohoe said the Government will continue to implement a number of measures to ensure Ireland remains as competitive as possible.
Fianna Fáil finance spokesperson Michael McGrath has said Ireland needs to enhance its tax system to ensure competitiveness following Mr Osborne’s announcement.
Mr McGrath said: "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.
"Fianna Fáil is advocating that the State resists the introduction of a common corporation tax across the European Union. Reform of the tax system relating to intellectual property must take place.
"We are also proposing changes within the Revenue Commissioners to ensure Research &and Development tax matters are dealt with effectively."
Yesterday, Ibec, a group that represents Irish business, said Mr Osborne's plan "reinforces the need to significantly reform" the Irish corporation tax model.
Ibec CEO Danny McCoy said: "Ibec has long highlighted the competitive threat from the UK's increasingly pro-business tax regime.
He added that "the UK vote to leave the EU only increases the need for Ireland to significantly improve its business and personal tax offering".
