Irish companies pay among the lowest corporate tax rates in the world, but the tax system is transparent and above board, according to a new survey which will likely be seized on by the Government to face down threats from Brussels.
Accountants PriceWaterhouseCoopers (PwC), which has in the past played a role in helping frame national corporate tax policy, said its survey with the World Bank showed the country’s effective tax rate levied on companies was close to the official 12.5% headline rate.
When all company taxes are taken into account, including labour taxes such as PRSI and other taxes, a medium-sized company based in Ireland will pay 26% of its profits in taxes.
That compares with around 63% in France; almost 49% in Germany; 44% in the US; almost 31% in the UK; and around 29% in Switzerland.
In the past, the effective tax rates paid by multinationals here have been a hot issue of controversy. Amid an international furore, the Government has moved to phase out the so-called ‘double Irish’ tax arrangement that benefited foreign multinationals.
The process called Base erosion and profit shifting (Beps), which was driven by rich nations and overseen by the Organisation for Co-operation and Development has, however, had not undermined Ireland’s headline tax code.
“Post Beps, the focus will be on the tax rate, economic substance and people and Ireland scores well on all three,” said Joe Tynan, head of tax at PwC Ireland.
EU Commissioner Pierre Moscovici has also said Ireland has little to fear from plans for a consolidated corporate tax regime, but some observers say that the threat in time could prove significant.
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