Politicians have warned that the Republic has to protect its low business taxes after the chief executive of a big multi-national employer said that it would look again at its operation in the Republic if the levy were increased.

Kevin Rollins, chief executive of computer manufacturer, Dell, which employs 4,500 people in Dublin and Limerick, told a Sunday newspaper that the company would reassess its investment in the State if the Government increased our 12.5 per cent tax on corporate profits.

"Any time a cost goes up, we will reassess our position, particularly with tax," Mr Rollins said.

His statement prompted Fianna Fáil TD Peter Power to warn that there should be "no going back" on the low corporate tax rate.

"This could have very serious consequences for jobs. Even a modest increase in the rate would be very damaging," he said.

Mr Power is a TD for Limerick East, where Dell's European manufacturing operation is based. It is one of the biggest employers in that region.

Mr Rollins' issued his warning as it emerged that the Republic's low-tax strategy is coming under increasing fire from the European Commission and the US, whose companies are the biggest investors in the Republic, and the biggest beneficiaries of its tax policies.

The New York Times last week described the Republic as a "tax haven" as it emerged that US high-tech companies are booking revenues and profits here in order to take advantage of the low corporation tax rate and specific breaks for research and development and intellectual property.