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.
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.
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.
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
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.
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.
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 irishtimes.com.