Ireland most effective in EU for business tax

Ireland is the top country in the EU when it comes to the ease with which businesses can handle their tax obligations, according to a new study.

The latest annual Paying Taxes report from the World Bank/PwC ranks Ireland sixth in the world in terms of the ease of paying business taxes.

It finds that the fictional business used in its study would have to devote 80 hours complying with the Irish tax regime compared to an average in Europe of 179 hours.

Ireland also scored well on the number of taxes that a business had to deal with, and the total tax take from corporate profits (25.7 per cent as against an EU average of 41.1 per cent).

On corporation tax, the study found that Ireland has an effective corporation tax rate of 12.3 per cent, very close to its statutory rate of 12.5 per cent.

The average effective tax rate in Europe was 12.9 per cent, and globally was 16.1 per cent.

Ireland’s tax system is one of the most efficient in terms of bureaucracy and administrative burden when it comes to paying, filing, time spent and the amount of tax levied on businesses,” said PwC.

The study’s findings include the following statutory/effective corporation tax rates: Germany (30-33 per cent/8.1 per cent); France (33.3 per cent/8.7 per cent); and the UK (25-21 per cent/21.6 per cent).

“The survey confirms that Ireland’s tax system is the most effective and straightforward in the EU,” said Fergal O’Rourke, head of tax at PwC Ireland. “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.”

According to the study, a typical Irish company spends just over a quarter of its total 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 nearly half of its commercial profit in taxes, spending over seven weeks dealing with its tax affairs, and making a tax payment every two weeks.