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Cantillon: A Very Different Tale About Corporate Tax

25 November 2013   (0 Comments)
Posted by: Author: The Irish Times
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Author: The Irish Times

The latest Paying Taxes report from PricewaterhouseCoopers/the World Bank at first glance tells a very different tale to the reports carried in this newspaper and elsewhere about Dublin-based multinationals paying very little tax on whopping great turnovers and profits.

According to the PwC/World Bank report, Irish corporates pay an average effective tax rate of 12.3 per cent, almost exactly the 12.5 per cent statutory rate that applies to non-passive corporate profits.

This compares with an EU average effective tax rate of 12.9 per cent, and a global effective rate of 16.1 per cent. Germany has a corporation tax rate of between 30 per cent and 33 per cent, but an effective tax rate of only 8.1 per cent, while for France the comparative figures are 33.3 per cent and 8.7 per cent.

So much for low corporation tax Ireland. Bundestag and the Right Honourable Margaret Hodge MBE take note.

But all of that has little to do with the type of arrangements that have prompted some, including senators from Washington DC, to label Ireland a tax haven.

The type of arrangement organised by some multinationals, including such technology giants as Microsoft and Google, involves Irish-registered companies that have huge turnovers from international sales being subjected to licence or royalty fees by fellow Irish-registered subsidiaries that are resident, for tax reasons, in some real tax haven such as Bermuda or the Cayman Islands.

Such arrangements do not impact on the results of the PwC/World Bank study, as the "profits” made by the two Irish-registered companies are mostly recorded in some small Caribbean isle for the purposes of taxation (or, more correctly, non-taxation).

PwC, in its commentary on the Paying Taxes report, praised the Irish regime, saying the rates, the ease of use, the transparency of the system, and the low number of taxes levied on corporates was a credit to the legislators, the Revenue service and the tax practitioners who had worked together on a wide range of issues to make Ireland an easy country in which to do business.

If the OECD and others do close down the type of aggressive avoid-tax-at-all-costs schemes used by Google et al, Ireland Inc is likely to benefit.

This article first appeared in


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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