Ireland

Our 12.5% corporate tax rate mantra is sounding increasingly hollow


Everyone is tiptoeing very carefully around the thorny subject of corporation tax right now. Well, everyone except for Leo Varadkar.

The Tánaiste has floated a proposal that appears, on first sight, to be both impractical and unnecessary. Without, it appears, any discussion in Cabinet, he has raised the notion of a two-track regime, almost all companies (anyone with turnover below €750 million) staying on the 12.5 per cent rate and any companies above that moving to a new, higher rate – most likely 15 per cent.

Apart from the difficulty of getting EU sanction for such an arrangement and the risk of encouraging tax avoidance by those approaching the cutoff, there appears to be no demand for it. Irish business has long become reconciled to the notion that corporation tax is going to rise under the OECD process.

But they do have other concerns. There has been a clamour for the reform of the EIIS scheme for investment in early-stage companies, currently seen as overly bureaucratic and miserly. And entrepreneurs have also been actively lobbying for a number of years for a more generous capital gains tax regime for business owners selling their business.


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