Belfast Telegraph

Friday 22 August 2014

Republic named easiest country in EU to pay business tax

The Republic is the easiest country in the EU to pay business taxes in and the sixth easiest in the world, according to new research from PwC.

Unlike much of Europe, its real or "effective" corporate tax rate is virtually the same as the official rate of 12.5%.

The research says Ireland's effective corporate tax rate is 11.9%, close to its statutory rate, meaning the tax across the border is clear and transparent.

France's statutory corporate tax rate is 33.33%, but its effective rate – the country's headline tax rate plus all the other tax allowances and exclusions afforded to companies – is just 8.2%.

Luxembourg's statutory rate is 22.47%, but its effective rate is just 4.1%.

The study, compiled by accountants PwC and the World Bank, examines the corporate taxes of 185 states.

Ireland's rate compares well to the EU & EFTA region, which includes Iceland, Liechtenstein, Norway and Switzerland, as well as the EU's 27 members.

The average effective level of corporate tax in the EFTA is 12.7%. The global average is 16.1%.

PwC says Ireland's success in attracting investment is partly due to Revenue's proactive approach and its advances in the area of electronic filing and payments.

Companies look at tax rates but also the administrative burden associated with paying it.

The total tax cost for Irish businesses, which includes everything from corporate tax to labour tax to road tax, is at 26.4% of pre-tax profits. It is the third lowest in the EU and EFTA region, where the average rate is 42.6%. Italy had the highest total tax figure at 68.3%.

A typical Irish company spends just over a quarter of its commercial profit in taxes, spends two weeks each year dealing with its tax affairs and makes a tax payment nearly every seven weeks.

Globally a typical company pays nearly half of its profits to taxes, spends over seven weeks dealing with its tax affairs, and makes a tax payment every two weeks.

Tax head at PwC Ireland Feargal O'Rourke says Ireland's tax transparency, low rate and ease of payment are vital to attracting FDI, particularly multinationals.

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