Please enter your email address to receive a password reminder.
Log into Tax-News+
Ireland must ensure that its tax system supports and rewards employment, enterprise, investment, and innovation, the National Competitiveness Council (NCC) has said.
The NCC has published a new report, "Benchmarking Competitiveness: Ireland and the UK, 2017," in which it warned that Brexit poses "a serious and imminent threat to Ireland's economic prosperity."
Professor Peter Clinch, Chairman of the NCC, commented: "In the run-up to, and post-Brexit, we should expect the UK to intensify its investment in infrastructure, enhance and develop its tax and non-tax offering for enterprise, develop its skills and innovation base, and expand its reach into new and existing markets. Ireland cannot afford to stand still."
According to the report, "Ireland's tax competitiveness relative to other jurisdictions is crucial as entrepreneurs and enterprises make decisions as to where to base their businesses."
It noted that while Ireland's income tax system is progressive, at 51 percent its top marginal tax rate is high relative to the UK (47 percent) and the US (48.6 percent). It added that the highest rate starts to apply in Ireland from just below the average industrial wage, whereas in the UK the rate applies at 4.2 times the average industrial wage.
The NCC also pointed out that the standard rate of Irish VAT (23 percent) is higher than the UK's (20 percent), and that, by leaving the EU, the UK will no longer be bound by the EU directive on top and bottom rates. It said Ireland's corporation tax regime remains competitive and stable, but cautioned that proposed reductions to corporation tax rates in the UK and US could pose a challenge, as could an EU-wide common consolidated corporate tax base.
"It is vital that Ireland's tax offering remains competitive for firms seeking an EU base for operations. Ireland also needs a competitive tax offering to attract and develop knowledge-based investment, related to research and development and intellectual property," the report said.
With regard to the tax base, the NCC said that personal income taxation in particular has a relatively narrow base and a relatively rapid progressivity. The overall system is also comparatively more reliant on distortionary direct taxes and less reliant on property and wealth taxes. "To ensure the sustainability of the public finances, it is important that the principle of maintaining a broad tax base is applied," it argued.
IMPORTANT NOTICE: Wolters Kluwer TAA Limited has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
All rights reserved. © 2017 Wolters Kluwer