Study show Ireland has most effective corporate tax system in Europe

Ireland has the most effective corporate tax system in Europe with the least amount of red tape, according to a study from PwC and the World Bank.

Ireland’s effective rate comes in close to the headline rate – 12.4% – just 0.1% below the Government’s much criticised 12.5% advertised rate.

In France, the headline rate is 33% but the effective rate is closer to 7.5%.

The tax system here also continues to be one of the most efficient in terms of bureaucracy and administration.

The “Paying Taxes 2015” survey shows that Irish companies on average spend 80 hours a year complying with the tax regime compared to 218 hours in Germany.

It also reveals that a typical Irish company spends nearly half of its commercial profit in taxes, spends two weeks dealing with its tax affairs and makes a tax payment nearly every six weeks.

Globally this compares to the typical company paying over a third of its commercial profit in taxes, spending over seven weeks dealing with tax affairs and making a tax payment every two weeks.

Ireland is ranked fourth in the EU with it comes to the cost of taxes. Ireland has a rate of 25.9% compares to the lowest rate of 20.2% for Luxembourg and 66.6% for France.

The study comes as plans to revisit the common consolidated corporate tax base come back onto the political agenda in Europe.

The idea for a common formula for calculating taxes on business across Europe was first mooted over a decade ago but it looked like the idea might have disappeared until its re-emergence since the recent “Luxleaks” controversy.

“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,” commented Fergal O’Rourke, head of tax at PwC.

“The survey confirms that Ireland’s tax system is 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 much less bureaucratic system compared to other EU countries,” he added.

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