Ireland Tops Europe For Ease Of Paying Taxes

by Jason Gorringe, Tax-News.com, London

08 January 2010

Ireland is the easiest country in Europe in which to pay business taxes for the third year running and the sixth easiest in the world, according to a new report by PricewaterhouseCoopers, the World Bank and the International Finance Corporation.

The report – ‘Paying Taxes 2010 – The global picture’ - covers 183 countries worldwide, and looks at all taxes paid by businesses, using broad principles from PwC’s Total Tax Contribution Framework.

The ranking by PwC/The World Bank is unique, as it looks beyond corporate income tax to all of the other business taxes paid and is a measure of effectiveness of tax systems around the world. It shows how businesses are affected not only by tax rates, but also by the procedural burden of compliance.

The report focuses on three indicators which are used to determine the overall ease of paying taxes. These are:

• The time it takes to comply (Ireland ranked 2nd in Europe with 76 hours);
• The cost of taxes, which is measured by the total tax rate (Ireland ranked 2nd in Europe with 26.5%);
• The range of total tax rates for Europe varied from the lowest of 21% for Luxembourg to the highest of 68% for Italy. (The total tax rate covers five types of taxes that organizations pay: profit, social security, property, turnover, and other taxes, such as fuel taxes etc); and
• The number of tax payments made (Ireland ranked 9th in Europe, with 9 payments).

Reflecting on the result, Colm Kelly, Senior Tax Partner, PwC Ireland, observed that:

"This is very good news for Ireland particularly given the ongoing challenging economic and business environment. As the easiest place in Europe and the sixth easiest place in the world to deal with business taxes, Ireland is clearly in a leadership position in this area when attracting Foreign Direct Investment."

"The survey demonstrates that, having simpler tax systems with competitive business tax rates, gives Ireland a real advantage in the market for attracting direct investment. It's a win-win for the government and industry.”

He continued: “One of the reasons why Ireland leads in Europe as the easiest country in which to deal with taxes is due to the Revenue continuing to make substantial advances in the area of electronic filing and payments and taking a proactive approach to making it 'easier' for companies to deal with their obligations.”

“Ireland’s transparent tax regime and low corporate tax rate together with the relative ease to pay tax is vital in continuing to underpin the positioning of Ireland as a location of choice for foreign direct investment. This transparency and relative ease to pay taxes will be an even more important element in providing us with an opportunity to help multinational corporations establish headquarter operations in Ireland."

The overall rankings for the EU with regard to ease of paying taxes are, in order: Ireland, Denmark, Luxembourg, the United Kingdom, the Netherlands, Estonia, Sweden, Latvia, Lithuania, France, Germany, Finland, Belgium, Greece, Spain, Portugal, Slovenia, Bulgaria, Austria, Slovakia, Czech Republic, Hungary, Italy, Romania and Poland.

The top 20 worldwide economies for ease of paying taxes are, in order, Maldives, Qatar, Hong Kong (China), United Arab Emirates, Singapore, Ireland, Saudi Arabia, Oman, New Zealand, Kiribati, Kuwait, Mauritius, Bahrain, Denmark, Luxembourg, the United Kingdom, Norway, Botswana, Timor - Leste and Vanuatu.

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