Dáil Éireann Debate, Thursday - 17 January 2013
58. Deputy Seán Crowe asked the Minister for Finance his views on whether a minimum number of employees should be employed before a company may be established for the purposes of corporation tax; if he will provide an estimate of the number of persons who are currently operating and paying tax as a company; and if he will make a statement on the matter. [1790/13]
View answerIt is not clear from the question what the underlying issue is that the Deputy is referring to. However, a number of features of our corporation tax regime may be relevant here.
In the first instance, there are certain anti-avoidance rules that may apply to company with few members such as the close company surcharges. The close company surcharges apply to Irish resident companies which are controlled by five or fewer participators (shareholders, directors and their associates) or by participators who are all directors. The surcharge is designed to discourage the retention and accumulation of investment and rental income in such companies and is effectively an anti-avoidance measure aimed at countering attempts to avoid personal income tax on passive non-trading income retained within a company.
Further there are 2 rates of corporation tax, one relating to trading income and the other broadly relating to non-trading (or passive) income. The 12.5% corporation tax rate applies only to the trading income of a company. In determining whether or not a trade is being carried out, the presence of employees is one of a number of factors taken into account in determining whether or not the profit arising from a certain activity qualifies for the 12.5% rate. A 25% rate broadly applies to non-trading or passive income.
I am informed by the Revenue Commissioners that while the number of companies that filed corporation tax returns was 124,404 for accounting periods ended in 2010, the latest year for which this information is available, the number of individuals associated with these companies is not identifiable from the returns.
