Tax Yield

Dáil Éireann Debate, Tuesday - 6 November 2012

Tuesday, 6 November 2012

Questions (232, 252)

Pearse Doherty

Question:

232. Deputy Pearse Doherty asked the Minister for Finance if he will provide in tabular form the effective tax rates paid by companies in annual profit bands of €0 to €20,000, €20,001 to €50,000, €50,001 to €75,000, €75,001 to €100,000, €100,001 to €150,000, €150,001 to €200,000, €201,000 to €300,000, €301,000 to €500,000, €500,001 to €1,000,000, €1,000,001 - €2,000,000, €2,000,0001 - €3,000,000, €3,000,001- €5,000,000, €5,000,001- €10,000,000, €10,000,001 - €50,000,000, €50,000,001 to €100,000,000, and more than €100,000,000. [47998/12]

Pearse Doherty

Question:

252. Deputy Pearse Doherty asked the Minister for Finance if he has considered introducing a minimum effective tax rate for businesses in legislation; if so, the effective rate he has considered and the financial outworking of same; if he will set out in tabular form the potential revenue raising for the Exchequer could be if a minimum effective rate of 5%, 6%, 6.5%, 7%, 7.5% and 8% was legislated for. [48522/12]

Written answers

Minister for Finance

I propose to take Questions Nos. 232 and 252 together.

There are different ways of measuring the effective rate of corporation tax depending on the variables that are used. As there is no single internationally agreed comparative measure in place, I am not in a position to provide the information on effective tax rates sought in either of the Deputy’s questions.

In answer to previous questions, I have acknowledged that one estimate of the effective rate of corporation tax in Ireland is 11.9%. This figure came from a 2011 Paying Taxes study produced by the World Bank and PriceWaterhouseCoopers as part of an annual Doing Business report and includes a measurement of effective tax rates across 183 countries. This effective tax rate was calculated based on the tax obligations of a standardised company operating in each country of the study and using standard assumptions regarding exemptions, deductions and allowances.

Another recent study by the European Commission – Taxation Trends in the EU 2011 - also indicates that Ireland has an effective corporate tax rate which is close to, or indeed higher than, the statutory 12.5% rate (the rate identified is, in fact, higher than 12.5% perhaps because of the higher 25% tax rate that applies, generally, to non-trading profits).

The above calculations are to give the Deputy examples of the differences that exist in comparative studies on effective tax rates, depending on how the rate is calculated or who carries out the calculation. However, the fact that these effective tax rates are close to our headline rate is reflective of the strong transparency around Ireland’s 12.5% corporation tax regime. Neither I, nor my Department, have considered the possibility of introducing a minimum effective tax rate for businesses.