March 2012

Ireland an attractive tax jurisdiction

Ireland’s effective corporate tax rate as low as 6.5% according to study

The effective corporate tax rate in Ireland might be as low as 6.5%, according to some research released last week on Irish Government figures for 2010 by the political organisation United Left Alliance.
This is close to half of Ireland’s marginal corporate tax rate of 12.5%, and ties with other studies and findings which have shown how companies such as Google and Apple are using Ireland to reduce corporation tax bills down to less than 5% in some cases. According to latest U.S. tax filings in 2012, Apple paid just 1.9 percent tax on profits made outside of the US in 2011. Google has availed of the ‘double Irish’ and ‘Dutch sandwich’ tax avoidance strategies to legally reduce their corporate tax rate down to about 2% according to various news articles in 2011.
Another factor that reduces the marginal rate is the generous 25% Research & Development credit that companies can avail of in Ireland, as well as the 0% corporate tax relief for start-up companies who employ staff. This and other generous government incentives all contribute to the significant reduction of the marginal rate.
The Irish Government has said it is ‘not sure’ what the effective corporation tax rate is, however this finding which is based on actual tax paid by corporate entities again emphasises the attractive of Ireland as a low tax jurisdiction for trading and holding companies.
It’s not just companies such as Google, Facebook, Apple, Linkedin, etc. who have availed of Ireland’s ultra-low corporate tax rate – You can do it too!