There are fundamental changes in attitudes and approaches to tax all over the world according to KPMG International’s Corporate and Indirect Tax Rate Survey 2014. The survey shows that Irelands corporation tax rate of 12.5% is the fourth lowest internationally and the lowest in the EU. This taxation profile is a positive force in making Ireland an attractive location for mobile international investment.
The survey reveals that 6 EU countries – Denmark, Finland, Portugal, Slovenia, Sweden and the UK have cut their corporate tax rates in the past year while four – Cyprus, Greece Luxembourg, and Slovakia - increased them in the same period. Globally, nine countries increased their corporate tax rate and 24 decreased them.
Commenting on the Survey, Conor O’Brien, Head of Tax at KPMG Ireland said; “The report shows that recent trends in Ireland are consistent with what Governments are doing globally – holding or reducing corporate taxes while indirect taxes go up. Ireland, with a standard VAT rate of 23%, is the fifth highest internationally on the indirect side.”
On VAT and excise duties O’Brien notes; “Indirect taxation is becoming the ‘tax of choice’ for governments around the world who are looking to raise income. 13 countries have increased their indirect tax rates with none reducing them.”
According to O’Brien; “One of the biggest challenges today is that tax law is local but businesses are global. The OECD has identified the ‘hierarchy of influence’ which different types of tax have on investment and job creation. It rates corporation tax as the most significant influence on investment decisions, followed by personal tax rates, with indirect taxes and property taxes the least influential.
Pointing out that competitor countries such as Switzerland, Hong Kong and Singapore have top rates of income tax in the region of 20% O’Brien concludes; “If there is an area for concern for Ireland, it is that our personal tax rates are becoming less competitive. In recent years we have seen personal tax rates in some of our key competitor countries like the UK reduced making these locations more attractive for international investors.”
You can view the survey here.