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News : Irish Economy Last Updated: Nov 21, 2013 - 6:51 AM

Global taxes on labour overtake profit; Ireland among lowest for business taxes
By Michael Hennigan, Finfacts founder and editor
Nov 20, 2013 - 8:45 AM

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Global taxes on labour overtook levies on profits in 2012 according to the latest issue of "Paying Taxes" produced by PwC, the Big 4 accounting firm, in association with the World Bank. The report published yesterday shows that Ireland is among the countries from a total of 189, with the lowest total business taxes.

Ireland got a 6th rank overall which includes the Total Tax Rate (tax on profits, social security taxes and other charges such as rates and property taxes), tax payments and time to comply.

United Arab Emirates (UAE) got a top rank followed by Qatar, Saudi Arabia, Hong Kong, Singapore, Ireland, Bahrain, Canada, Oman and Kiribati.

On average globally, companies pay a tax rate of 43.1% on their profits, compared with 14.9% in the UAE, 25.7% in Ireland, 34.0% in the UK, 64.7% in France, 49.4% in Germany and  65.8% in Italy.

The template company in the PwC study is a 60-person domestic one and the Irish effective rate of tax is put at 12.3%

This tax level is not the reality for multinationals in Ireland and Finfacts has calculated an effective rate of 2.5% for American companies operating in Ireland.

So if the Finfacts rate is used, Ireland's total business tax rate would be at the level of Saudi Arabia and the UAE, the Gulf oil producers.

Two key points:

1) Why is the performance of Irish indigenous firms so poor given the benefit of the world's lowest business taxes?

2) The low employer social  security cost is reflected in one of the worst private sector occupational pension systems in Europe with coverage for half the workforce while politicians and public sector workers have one of  the world's best schemes -  - a guaranteed payout linked to current earnings.

"Paying Taxes 2014"

Finfacts: US company profits per Irish employee at $970,000; Tax paid in Ireland at $25,000

Finfacts: Half of Ireland's workforce have no occupational pension coverage

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