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Tax Burden 'Biggest Threat' To Irish Businesses

12 July 2013   (0 Comments)
Posted by: Author: Jason Gorringe
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Author: Jason Gorringe

86 percent of Irish businesses think that an increasing tax burden is their biggest threat by far, a new survey has shown.

PwC's 2013 CEO Pulse Survey reveals that businesses are especially concerned about the rising tax burden on employees. The combination of income tax, pay-related-social-insurance (PRSI), and the Universal Social Charge means that employees face an effective tax rate of 52 percent on income over EUR32,800 (USD42,037). As PwC points out, this has "significantly increased the tax wedge between what is paid to, and what an employee receives, into their hand." Only 59 percent of European businesses regard similar developments in their own jurisdictions with the same apprehension.

42 percent of the 225 participating CEOs said that the two factors most critical to the maintenance of Ireland's attractiveness as a location for foreign direct investment (FDI) are the retention of a 12.5 corporate tax rate and improvements in cost competitiveness. This compares with the 82 percent of CEOs who cited the corporate tax rate and the 49 percent who pointed to cost competitiveness as key determinants in last year's survey.

The survey defends Ireland's corporate tax rate, stressing that although it is low, it "operates in the context of Organization for Economic Cooperation and Development tax principles and taxes profit which are derived from what is done in Ireland." Ireland is also a party to 69 tax treaties, and possesses "a transparent tax system and a world class research and development tax credit regime."

Among the other tax related issues CEOs deem likely to impact on FDI decisions are Ireland's retention of a competitive personal tax regime for foreign employees (11 percent), and an extensive network of tax treaties with other countries (11 percent). Looking forward, 38 percent of respondents argued that the Government should make marketing the corporate tax regime internationally a priority over the next year. The number of CEOs also urging the prioritization of a cut to personal income tax rates has gone up from 11 percent in 2012 to 29 percent.

More generally, nearly a third of those questioned regarded the outlook for Ireland's economy favorably, compared with just under a quarter last year. 44 percent said they were also positive about the prospects of their own company, with 53 expecting profit growth. The number of CEOs planning to invest domestically has gone up from 33 percent in 2012 to 43 percent, while 55 percent intend to expand their market footprint in existing foreign markets.

Speaking at the survey launch, PwC Senior Partner Ronan Murphy said: "Despite ongoing challenges, Irish businesses are actively looking for growth opportunities. At the same time, they are sticking to what they know best, investing in their businesses, while trying to balance efficiency and value. Consequently, they are emerging more agile and resilient. As an exporting economy, our recovery will depend on the extent of the pick-up in the economies with which we trade.

"Reacting to the survey, Jobs Minister Richard Bruton defended the Government's record: "Over the past two years this Government has been implementing our plan to bring growth and jobs back to the economy, putting in place for example more than EUR2bn in non-bank funding for business. While it is clear that many challenges remain, we have been seeing increasing signs of optimism in recent months, with 2,000 jobs now being created every month in the private sector.

"This PwC survey, which is a valuable insight into the challenges and opportunities facing businesses across the country, confirms that while significant difficulties remain to be overcome, significant progress is being made. With continued strong implementation of our plan I am determined to ensure that we can build on this progress and accelerate growth and job-creation in the economy."


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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