Madam, – Another day, another lemming-hearted side swipe at Irish corporation tax policy in The Irish Times, this time via your columnist John Waters (Opinion, December 17th).
The 12.5 per cent rate does not make Ireland a tax haven, nor a tax shelter. It reduces the incidence of double taxation, that is to say, the same profits being taxed twice, in international markets. That makes us competitive for foreign investment.
We compete for foreign investment with the UK, which only last month announced a reform of its corporation tax rules under the banner “Delivering a more competitive system”. Our tax incentives for research and development investment compete with the tax incentives offered by Australia, Canada, France, Israel, the Netherlands, and the US. Other EU member states such as France and Spain also have special income tax regimes to attract in foreign expertise.
It makes us competitive domestically to encourage entrepreneurship and the creation of real sustainable employment for our people.
Companies established in Ireland will pay some €3.5 billion directly in corporation tax this year. They will also pay the vast bulk of the €6 billion employers’ PRSI which the social insurance fund receives annually. When the after-tax profits of a company accrue to Irish owners as salary or dividends, those owners pay further Irish income tax and PRSI on them. If they accrue to foreign owners, those owners will be taxed in accordance with the laws of their land. – Yours, etc,