Irish Corporate Tax Rates Come Under Further Fire

There have been many questions raised over Irish corporate tax rates, and specifically whether offshore companies are able to enjoy a considerably lower rate than those companies that actually operate in Ireland. The question of multinational tax rates continues to wage, even though the Irish government has defended their policy and said that they continue to comply with the EU and their investigation into global taxation rates. However, a study by the University of Dublin has cast fresh scrutiny over the whole affair, after it claimed that US companies pay just 2.2% tax.

Tax havens, tax loopholes, double Irish, and the Dutch sandwich, are terms that few people had heard until a year ago. However, they are becoming increasingly commonplace, following high profile cases involving celebrities like Jimmy Carr and massive global corporations like Starbucks and Apple. It isn’t just the EU and EU governments that are concentrating on corporate taxes any longer.

Ireland has a history of offering low corporation tax rates. The current rates are 12.5% for trading income, 25% for non-trading income, and a now-defunct special 10% rate for companies in manufacturing. EU member states, primarily France, have hit out at the country’s tax policies, stating that it meant companies operating in the country had an unfair and uncompetitive advantage over rivals, because they paid less tax than their counterparts.

A study by Professor James Stewart of Trinity College, Dublin, apparently shows that US companies operating in Ireland would only pay an equivalent tax rate of 2.2%, despite the government’s claims that all companies pay the same rates. The paper claims that the effective tax rates are roughly equivalent to those in tax havens like Bermuda.

The government has responded to the report by Professor Stewart, pointing out that a hypothetical company with no actual trading history was used to come up with the figures. Minister for Public Expenditure and Reform, Brendan Howlin, said that the country does not have any brass plate companies, and that it was hardly surprising that a made-up organisation such as the one used in the Trinity College paper would have such a low tax rate, because it did not trade.

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