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Irish Tax Regime 'Most Business Friendly In EU'

by Jason Gorringe, Tax-News.com, London

15 December 2017


Ireland tops the EU league of business-friendly tax regimes and is an attractive location in which to do business, according to a new survey by PwC.

PwC has published its 2018 Group Paying Taxes report. It said that Ireland is the most effective country in the EU in which to pay business taxes and is the fourth most effective worldwide – up from fifth place globally last year.

The research is based on a case study involving a medium-sized domestic company, with the aim of comparing on a like-for-like basis a range of countries to determine how businesses are affected by taxes and by the procedural burden of compliance.

According to PwC, the top 10 rankings for EU countries on ease of paying taxes are: Ireland, Denmark, Finland, Latvia, Estonia, Lithuania, Switzerland, the Netherlands, Luxembourg and the UK. Globally, the rankings are: Qatar and the United Arab Emirates (joint first), Hong Kong, Ireland, Bahrain, Kuwait, Singapore, Denmark, New Zealand, and Mauritius.

PwC's key findings were that a medium-sized company in Ireland:

  • Pays a total of 26 percent of its profits in taxes, compared to 39.6 percent for the EU and 40.5 percent globally. This figure is made up of 12.4 percent in profit taxes, 12.2 percent in labor taxes, and 1.4 percent in other taxes;
  • Takes 83 hours to comply, compared to 161 hours for the EU and 240 hours globally;
  • Makes nine tax payments compared to the average of 12 for the EU and 24 globally;
  • Takes one hour to file a VAT refund, compared to 7.1 hours for the EU; and
  • Takes two hours to comply with a corporate income tax audit, compared to 7.3 hours for the EU.

Broadly, PwC concluded that a typical Irish company spends around a quarter of its total commercial profit in taxes, spends just over two weeks dealing with its tax affairs, and makes a tax payment nearly every six weeks. Globally, a typical company pays over a third of its commercial profits in taxes, spends nearly seven weeks dealing with its tax affairs, and makes a tax payment every two weeks."

Joe Tynan, Head of Tax at PwC, said: "When you look at the mix of the tax indicators – cost and compliance – the report highlights that Ireland does very well in terms of tax competitiveness. When you take labor and other taxes into account, Ireland's total tax rate on corporate profits is much lower when compared with many other EU countries such as the UK, Germany, Sweden, and France, and also the US and China."

"And ranking as the most effective country in the EU for paying business taxes, Ireland remains a very attractive location in which to do business."

Tynan added: "While many countries such as the US and the UK are taking steps to reduce their corporate tax rate, Ireland will still compare very well. International companies will look for sustainable tax models and Ireland has just that."

"We need to continue to work with the OECD to ensure that we continue to be recognized as having a corporate tax system that is fit for purpose and at the forefront of global standards."

TAGS: United Arab Emirates | compliance | tax | business | tax compliance | Denmark | Ireland | Kuwait | Mauritius | Netherlands | revenue guidance | corporation tax | audit | Bahrain | China | Estonia | Latvia | Luxembourg | Qatar | Singapore | United Kingdom | tax rates | Finland | France | Germany | Hong Kong | New Zealand | Sweden | Switzerland | United States | standards | Lithuania

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