Steady decline in corporate tax rate across the EU

Scofflaw

Not wishing to panic anybody, but it appears that we're undergoing fiercer tax competition from other EU countries:

Ireland still has one of the lowest corporate tax rates in the EU at 12.5% but is undercut by Cyprus and Bulgaria, both at 10%. The strong overall trend across the EU is downwards, with several countries reducing their rates in 2010.

The figures are published in a European Commission report out today which compares tax rates across the EU.

In the first year of the economic crisis, 2008, Ireland had one of the lowest tax burdens in the EU. Ireland, along with Romania, Latvia and Slovakia had a tax-to-GDP rate of less than 30%, while the highest rates were in Denmark and Sweden at almost 50%. (Harmonised tax-burden figures for 2009 are not yet published.)

The average top personal income tax rate in the EU increased in 2010, largely due to a 10-percentage point hike in the United Kingdom, bringing top British rates to 50%. Ireland's top rate is 41%, down 3% since 2000.

The highest top rates for personal income tax in 2010 are in Sweden (56.4%), Belgium (53.7%) and the Netherlands (52.0%), and the lowest in Bulgaria (10.0%), the Czech Republic and Lithuania (both 15.0%).

The overall tax-to-GDP ratio in the EU was 39.3% in 2008, the first year of the crisis, compared with 39.7% in 2007.

In comparison with the rest of the world, the EU27 tax ratio remains generally high and more than one third above the levels recorded in the USA and Japan.

MORE DETAIL
The overall tax-to-GDP ratio1 in the EU272 was 39.3% in 2008, the first year of the economic and financial crisis, compared with 39.7% in 2007. The EU27 tax ratio was 40.6% in 2000, fell to 38.9% in 2004 and then rose until 2007.

The overall tax ratio in the euro area2 (EA16) fell to 39.7% in 2008 compared with 40.4% in 2007. Since 2000, taxes in the euro area have followed a similar trend to the EU27, although at a slightly higher level.

In comparison with the rest of the world, the EU27 tax ratio remains generally high and more than one third above the levels recorded in the USA and Japan.

However, the tax burden varies significantly between Member States, ranging in 2008 from less than 30% in Romania (28.0%), Latvia (28.9%), Slovakia (29.1%) and Ireland (29.3%), to almost 50% in Denmark (48.2%) and Sweden (47.1%).

Between 2000 and 2008, the largest falls in tax-to-GDP ratios were recorded in Slovakia (from 34.1% in 2000 to 29.1% in 2008), Sweden (from 51.8% to 47.1%) and Finland (from 47.2% to 43.1%), and the highest increases in Cyprus (from 30.0% to 39.2%) and Malta (from 28.2% to 34.5%).

This information comes from the 2010 edition of the publication Taxation trends in the European Union issued by Eurostat, the statistical office of the European Union and the Commission’s Directorate-General for Taxation and Customs Union. This publication compiles tax indicators in a harmonised framework based on the European System of Accounts (ESA 95), allowing accurate comparison of the tax systems and tax policies between EU Member States.

The report is available from here - look for "Taxation trends in the European Union - Data for the EU Member States and Norway ".

cordially,
Scofflaw

Nijmegen

Falling taxes combined with lower wages and other costs in these countries is what we're up against when we talk competitiveness in Ireland.

The minimum wage in Cyprus is €12,000 PA versus €18,000 in Ireland. A massive 33% difference.

The deciding factor can then be the availability of English speaking workforce, of a foreign speaking worforce (Eg. for worldwide customer service centers such as for PayPal), and general infrastructure.

While we sit ahead on these at present, this will not be for long, and the development agencies of these countries will - quite rightly - be looking at strategic investments to beat Ireland to the post and win business. Ireland wrote the book on being an underdeveloped, low cost nation to invest in amid the worlds richest club of nations. We know how successful this strategy can be.

We need to lower our costs. Whatever soft advances we can make, a 33% pay premium (as just a start to the Irish costs) is not sustainable.

George Orwell 1982

Singapore has zero corporation tax. As well as that it has a quasi - dictatorship that can manage the economy and workforce without any resistance. Compete with that!

lmimmfn

irelands top rate is around 49% not 41%, levys and PRSI

smisra

Here is a link to a video created by Dr. Dan Mitchell, a senior fellow at the Cato Institute, to inform viewers about tax competition. Please consider posting and discussing this video.
http://www.youtube.com/afq2007#p/u/40/nJWLemN29Wc

127.0.0.1

Cyprus also has a 10% corporation tax rate and a much simpler + lower tax system

Ren2k7

Currently Ireland has two bands for Corporation Tax. 12.5% for trading income and 25% for non-trading income. To simplify the tax structure for companies a single corporate tax rate of 10% (the rate companies in the Shannon Free Zone and the IFSC) should be implemented. This would provide a much needed boost to the private sector and show to the world that Ireland can be competitive

K-9

The Corporation Tax rules here play a big part, as well as the rate.

WalterMitty

The tax regeime should only have been a teaser to get the companies here, then we should have developed the country as a hub for FDI but specialising in non tax based incentives and started setting up our own #MNCs instead of putting all out eggs in property basket. Feckin eijits.