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Ireland 'Most Effective Place In EU To Pay Business Taxes'

by Jason Gorringe, Tax-News.com, London

22 November 2016


Ireland remains the most effective country in the EU in which to pay business taxes, according to the latest PwC/World Bank Paying Taxes survey.

The report covered 189 economies worldwide, and considered all taxes paid by businesses. It analyzed the bureaucratic and administrative burdens placed upon businesses when it comes to time spent complying with and paying and filing taxes, along with the amount of tax levied. Ireland ranked 6th globally.

PwC and the World Bank found that a typical Irish company spends around a quarter of its total commercial profits in taxes. This figure is made up of 12.4 percent in profit taxes, 12.1 percent in labor taxes, and 1.4 percent in other taxes. In addition, this company spends just over two weeks dealing with its tax affairs and makes a payment nearly every six weeks.

PwC stressed that Ireland's statutory corporate tax rate of 12.5 percent is therefore very close to its "profit tax" rate of 12.4 percent.

The report explained that within the EU and the European Free Trade Area, a company will pay 40.6 percent of its commercial profit in taxes, comprising profit taxes of 12.6 percent, labor taxes of 26.5 percent, and 1.5 percent in other taxes. Globally, a typical company will spend 40.8 percent of its commercial profit in taxes, spend more than seven weeks dealing with its tax affairs, and make a tax payment every two weeks.

Joe Tynan, PwC Ireland's Head of Tax, said: "The survey demonstrates that having simpler tax systems with competitive business tax rates and a robust and transparent tax regime gives Ireland a real advantage in the market for attracting direct investment. The survey confirms that Ireland's tax system continues [to be] one of the most effective and straightforward in the EU. While no-one likes paying tax, the Irish tax system makes it relatively easy to comply with the rules and is [a] much less bureaucratic system compared to other EU countries."

He added: "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 together with 72 treaties and a world class R&D tax credit system are important elements in providing us with an opportunity to help multinational corporations establish operations in Ireland as well as expand their operations here."

TAGS: tax | investment | business | value added tax (VAT) | Ireland | corporation tax | tax rates | social security | European Union (EU) | Europe

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