Friday 24 November 2017

Ireland's effective corporation tax at approximately 10.8pc over a decade - report

Colm Kelpie

Colm Kelpie

IRELAND’s effective rate of corporation tax averaged between 10.7pc and 10.9pc over the last decade, a report by the Department of Finance states.

It claims that the tax paid by companies is close to the 12.5pc headline rate, amid controversy over the amount paid by multinationals here.


The Department commissioned University College Cork economist Seamus Coffey to examine what the so-called effective rate of tax is being paid by companies on profits made here.


The regime for taxing multinationals in Ireland has come under increased scrutiny internationally, amid claims from two US senators last year that Ireland was a tax haven.


On a visit to Paris earlier this year, Taoiseach Enda Kenny faced questions over Yahoo’s decision to move its operations to Ireland.


Global economic think-tank the OECD is also looking at clamping down on tax avoidance schemes such as the Double Irish, which allows multinationals limit their tax bills by shifting income from a high tax country to a lower one.


But the Paris-based body has stressed it does not regard Ireland as a tax haven.


The report released by the Department yesterday and coauthored by one of its tax specialists, Kate Levey, aims to find the best way to determine the effective tax rate paid on corporate profits earned here.


“There’s no doubt that there’s issues there, but that’s more to do with the international regime of corporation tax,” Mr Coffey said.


“For the profits that are declared in Ireland, it does appear that something close to 12.5pc are paid on those.”


The report looked at eight different approaches, using different economic data, with estimates of the effective rate ranging from 2.2pc to 15.5pc.


But it concluded that the most accurate data is based on calculations made by both the Central Statistics Office and the Revenue Commissioners.


It found that on average, the effective corporate tax rate over the last ten years has been between 10.7pc and 10.9pc.


The report has now been sent to the Oireachtas Finance Committee.

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