Taxation in The Republic of Ireland
Taxation in The Republic of Ireland
Taxation in The Republic of Ireland
Goodafternoon!
Ladies and gentlemen, my name is Tymur, and today I will tell you about the
tax system in Ireland.
If during the presentation you will have questions - please write them down,
and in the end I am happy to answer them.
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The main topics of my report will be:
Preface
Chapter 1. Direct taxes
Chapter 2. Indirect taxes
Chapter 3. Taxation evasion and tax avoidance
Conclusions
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In Ireland there is an income tax, a VAT, and various other taxes. Employees
pay pay-as-you-earn (PAYE) taxes based on their income, less certain
allowances. The taxation of earnings is progressive, with little or no income tax
paid by low earners and a high rate applied to top earners. However a large
proportion of central government tax revenue is also derived from value added
tax (VAT), excise duties and other taxes on consumption.
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On the following slide you can see the infographic with key indicators of the
country, and the main objectives of the tax system
universal free education
taxpayer funded healthcare
social welfare payments
public capital expenditure
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Income tax is charged in respect of all property, profits, or gains.
For administrative purposes, taxable income is expressed under four schedules:
Schedule C: public revenue dividends (i.e. coupon payments on
government debt)
Schedule D
From 1 January 2012, DIRT is charged at 30% (was 27% in 2011) for payments
made annually or more frequently. The tax is deducted by the bank or other
deposit-taker before the interest is paid to you.
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Corporation tax is charged on the profits of companies which includes both
normal income and chargeable gains. Certain expenses such as interest
repayments can be offset against profits. The current rate of corporation tax in
Ireland ranges from 10% to 25%, depending on the nature of the business.
The main rate, which is 12.5%, applies to trading income of companies. It is low
compared to international standards and its longevity (introduced in 2003) has
ensured widespread confidence among international enterprises in the value of
investing in the Irish economy
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VAT rates range from 0% on books, children's clothing and educational services
and items, to 23% on the majority of goods.
The 13.5% rate applies to many labour-intensive services as well as to
restaurant meals, hot takeaway food, and bakery products.
A 4.8% rate applies to supply of livestock and greyhounds.
A 5.2% "flat rate addition" applies to the agricultural sector, although this is not
strictly VAT it is charged by farmers not registered for VAT to compensate
them for VAT which they must pay to their suppliers.
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An excise or excise tax (sometimes called a duty of excise special tax) is an
inland tax on the sale, or production for sale, of specific goods or a tax on a
good produced for sale, or sold, within a country or licenses for specific
activities.
In Ireland excise tax is charged on mineral oil, tobacco, and alcohol.
Mineral oil includes hydrocarbon oil, liquefied petroleum gas, substitute fuel,
and additives
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Tax evasion in Ireland, while a common problem historically, is now not as
widespread. The reasons are twofold most people pay at source (PAYE) and
the penalties for evasion are high. The Irish Revenue target specific industries
every year. Industries have included fast food take away restaurants, banks and
farmers.
Tax avoidance is a legal process where one's financial affairs are arranged
so as to legitimately pay less tax. In some cases the Revenue will pursue
individuals or companies who avail of tax avoidance; however their success
here is limited because tax avoidance is entirely legal.
The areas where tax evasion can still be found are businesses that deal in a lot
of cash. The trades, small businesses, etc., will sell goods and perform services
while accepting cash for the good/service. The buyer will avoid paying VAT at
21% and the seller does not declare the monies for Income Tax. Revenue
perform random audits on businesses to discourage and punish this.
Businesses are regularly taken to court for tax evasion. Revenue claim a
business will be audited roughly every seven years.
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In the years 1990-2000, Ireland has become one of the largest offshore zones ,
which positively affected the success in attracting international financial
institutions. If an offshore company located in Ireland , its income derived
worldwide fall under the Irish corporate taxation .
Preferential treatment in the country has attracted banks and foreign capital.
For example, the Dublin International Financial Services Centre (IFSC)
specializes in the processing of bank information for Citibank, Merrill Lynch,
Daiwa, ABN Amro and another four hundred foreign banks.
Ireland has a very wide network of agreements on avoidance of double
taxation , which has 15 contracts. With a variety of different countries signed
on the extent and nature of the tax benefits of the agreement. In accordance
with these agreements is almost entirely tax " at source " exempt interest on
loans , royalty payments , rental payments on aircraft ownership and real
estate.