Irish corporate tax rate second lowest in Europe

Irish corporate tax rate second lowest in Europe – UHY

With its rate of 12.5pc, Ireland has the second lowest corporate tax burden in Europe behind Estonia which currently has zero corporate tax, according to new research from accounting and consultancy network, UHY.

The firm looked at tax data in 21 countries across its international network and found that Ireland has the third lowest tax rate, with both Estonia and Dubai have a rate of zero.

“Ireland has kept corporate taxes low and has successfully enticed large multinational businesses such as Microsoft and Google to place their headquarters here and to remain here,” said Alan Farrelly, partner, UHY Farrelly Dawe White. “The low 12.5pc tax rate applies to all businesses – irrespective of whether their pre-tax profit is US$100,000 or US$100m.     

“The need for Ireland to keep its corporate tax rate low is illustrated by changes that the UK made to its tax code to attract WPP back to the UK.

“Companies are increasingly mobile and are able to switch tax domicile with relative ease,” he said. “This has put governments in a quandary, as they seek to boost tax revenues in order to shore up public finances. Many countries have opted to resolve this problem by increasing personal taxes while reducing corporate tax rates. Once a major economy slashes corporate tax rates, however, it puts pressure on others to take similar measures to remain competitive.”

The research reveals that businesses making a statutory tax profit of US$100m each year will pay over three and half times more tax in the highest taxing country Japan (US$41,990,000) than in Ireland (US$12,500,000).

Tax payable Tax payable Tax payable
(assuming pre-tax profit of US$100,000) (assuming pre-tax profit of US$1 million) (based on statutory pre-tax profit of US$100 million)
Brazil $34,000 34% Japan $419,900 42% Japan $41,990,000 42%
Germany $32,450 32% USA $340,000 34% USA $35,000,000 35%
Italy $31,400 31% Brazil $340,000 34% France $34,397,363 34%
Japan $31,106 31% France $333,333 33% Brazil $34,000,000 34%
India $30,900 31% Germany $324,500 32% Germany $32,450,000 32%
Mexico $30,000 30% India $324,450 32% India $32,445,000 32%
Australia $30,000 30% Italy $314,000 31% Italy $31,400,000 31%
China $25,000 25% Australia $300,000 30% Australia $30,000,000 30%
Malaysia $25,000 25% Mexico $300,000 30% Mexico $30,000,000 30%
Spain $25,000 25% Spain $278,571 28% Spain $30,000,000 30%
Israel $24,000 24% China $250,000 25% Canada $29,187,384 29%
France $23,350 23% Malaysia $250,000 25% UK $26,000,000 26%
USA $22,250 22% Israel $240,000 24% China $25,000,000 25%
Netherlands $20,000 20% UK $238,337 24% Malaysia $25,000,000 25%
Russia $20,000 20% Netherlands $235,714 24% Netherlands $24,342,857 24%
UK $20,000 20% Canada $223,781 22% Israel $24,000,000 24%
Romania $16,000 16% Russia $200,000 20% Russia $20,000,000 20%
Canada $15,500 15.5% Romania $160,000 16% Romania $16,000,000 16%
Ireland $12,500 12.5% Ireland $125,000 12.5% Ireland $12,500,000 12.5%
Dubai, UAE $0 0% Dubai, UAE $0 0% Dubai, UAE $0 0%
Estonia $0 0% Estonia $0 0% Estonia $0 0%