Corporation Tax in Ireland
What is Corporation Tax?
Corporate tax refers to a tax levied on profits made by companies or associations.
Who pays Corporation tax?
n Ireland corporation tax is the main tax impinging on companies resident in the State and non-resident companies who trade in Ireland through a branch or agency.
How is Corporation tax charged?
Corporation tax is paid by resident companies on their worldwide income whereas non-resident companies trading in Ireland are liable to corporation tax on their Irish-sourced income only. The tax is charged on the profits of a company. "Profits" in relation to corporation tax consist of income and capital gains (gains arising from the disposal of capital assets).
The Rates of Irish Corporation Tax:
- 12.5%: Trading income
- 25%: Non-trading income
- 10%: Certain companies have their profits taxed at an effective rate of 10%.
Corporation Tax Schemes in Ireland
There are a number of special lower-tax regimes in Ireland, including the Shannon Free Zone, the International Financial Services Centre in Dublin, and the 'Manufacturing Rate of Corporation Tax, all of which have delivered a 10% rate of tax until varying dates between 2005 and 2010. Under the Irish Government's agreement with the EU that one rate of corporation tax of 12.5% applied to all Irish companies from 1st January 2003, transitional arrangements were put in place for existing companies under the 10% regime; The 'manufacturing rate' is in the process of being phased out but remains in existence for some companies until 2010.
The growth of the Irish economy in recent years can be attributed to the low rate of corporation tax, having made Ireland highly attractive for foreign investment, with the likes corporate giants like Google, Dell and IBM setting up key operation quarters in Ireland.