Irish Corporation Tax review - 80% paid by foreign multinationals - State exposed

robut

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Warning over foreign multinationals paying 80pc of corporate tax - Independent.ie PUBLISHED - 22/02/2017

About 80pc of corporation tax paid in Ireland is from foreign multinationals, leaving the State exposed to shocks, the Department of Finance has said.

A handful of companies pay most of the tax.

"Irish corporation tax receipts are highly concentrated, with 0.2pc of corporation tax cases contributing 65.3pc in net receipts," the Department said, in a document accompanying the consultation note.
I would imagine a substantial amount of indiginous small business, apparently backbone of the country, would pay little or no Corporation Tax because their is nothing left / no profit left to charge CT on after everything else is paid? (I am genuinely in this boat )

What does this tell us? If most CT is paid by Foreign Multinationals does it mean that most indiginous Irish SMEs are actually struggling, just about staying above water? OR are many/most actually "fiddling" the books some way to show no profit, which will probably be an accusation made by some here?

My reply is successive Irish Governments have concentrated on FDI but only and always paid lip service to local indiginous small to medium business. Not great support ..

To the broader Q - it would seem we are off again with eggs in one basket. One trick pony. Dependence on this "12.5%" corporation tax which now is under attack from EU, UK Brexit and Trump ( US may drop to 15% soon )

Thoughts PIE'ers ...
 
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Clanrickard

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Warning over foreign multinationals paying 80pc of corporate tax - Independent.ie



I would imagine a substantial amount of indiginous small business, apparently backbone of the country, would pay little or no Corporation Tax because their is nothing left / no profit left to charge CT on after everything else is paid? (I am genuinely in this boat )

What does this tell us? If most CT is paid by Foreign Multinationals does it mean that most indiginous Irish SMEs are actually struggling, just about staying above water? OR are many/most actually "fiddling" the books some way to show no profit, which will probably be an accusation made by some here?

My reply is successive Irish Governments have concentrated on FDI but only and always paid lip service to local indiginous small to medium business. Not great support ..

To the broader Q - it would seem we are off again with eggs in one basket. One trick pony. Dependence on this "12.5%" corporation tax which now is under attack from EU, UK Brexit and Trump ( US may drop to 15% soon )

Thoughts PIE'ers ...
I am in the same boat as you. Unlikely to be still afloat next year. Just finished P35 and people will have to go sadly. SMEs are still being hammered with no effort by government to alleviate the problem. If the EU manages to strong arm us into abandoning the 12.5% rate we are in big big trouble. 2008 will be a picnic.
 

robut

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I am in the same boat as you. Unlikely to be still afloat next year. Just finished P35 and people will have to go sadly. SMEs are still being hammered with no effort by government to alleviate the problem. If the EU manages to strong arm us into abandoning the 12.5% rate we are in big big trouble. 2008 will be a picnic.
Yes .. sorry to hear this. I am on my own, just about keeping head above water. Im bemused by all this boom stuff coming from Dublin, feel like Im in a different country. Have had calls since early January to now from many of my really small SME friends in panic, wondering why its so quiet this year so far. Afraid it was them only, but it aint it seems ..
 

GDPR

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Warning over foreign multinationals paying 80pc of corporate tax - Independent.ie



I would imagine a substantial amount of indiginous small business, apparently backbone of the country, would pay little or no Corporation Tax because their is nothing left / no profit left to charge CT on after everything else is paid? (I am genuinely in this boat )

What does this tell us? If most CT is paid by Foreign Multinationals does it mean that most indiginous Irish SMEs are actually struggling, just about staying above water? OR are many/most actually "fiddling" the books some way to show no profit, which will probably be an accusation made by some here?

My reply is successive Irish Governments have concentrated on FDI but only and always paid lip service to local indiginous small to medium business. Not great support ..

To the broader Q - it would seem we are off again with eggs in one basket. One trick pony. Dependence on this "12.5%" corporation tax which now is under attack from EU, UK Brexit and Trump ( US may drop to 15% soon )

Thoughts PIE'ers ...
We have a lot more to offer FDI companies than just our CT rate, language, culture, workforce, EU, lifestyle etc and our FDI companies are reasonably well spread in terms of industry sector.
Our own companies provide employment while FDI companies provide the bulk of tax paid, it would be better if there was a more even spread, but it's not vital that it should be so.

In other words something to keep in mind and look to what can reasonably be done to improve the situation, but I would think nothing drastic needs to be jumped into at this stage.
 

Spanner Island

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Warning over foreign multinationals paying 80pc of corporate tax - Independent.ie

I would imagine a substantial amount of indiginous small business, apparently backbone of the country, would pay little or no Corporation Tax because their is nothing left / no profit left to charge CT on after everything else is paid? (I am genuinely in this boat )

What does this tell us? If most CT is paid by Foreign Multinationals does it mean that most indiginous Irish SMEs are actually struggling, just about staying above water? OR are many/most actually "fiddling" the books some way to show no profit, which will probably be an accusation made by some here?

My reply is successive Irish Governments have concentrated on FDI but only and always paid lip service to local indiginous small to medium business. Not great support ..

To the broader Q - it would seem we are off again with eggs in one basket. One trick pony. Dependence on this "12.5%" corporation tax which now is under attack from EU, UK Brexit and Trump ( US may drop to 15% soon )

Thoughts PIE'ers ...
SMEs and the self employed etc. are taken hugely for granted in Ireland.

Screwed at every turn and entitled to f*** all while the IDA search the world for FDI with huge enticements...

It's a joke... but there you go...

We're far too dependent on FDI... but that's the way it is and it would/will take a long time to develop a more balanced economy if there was a will to do that.

More should be done to support and to try and keep indigenous businesses here instead of bringing them to a certain level only to see them sold off to the global players...
 

robut

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BTW .. ( from link in OP )

The consultation document states that the review should look at achieving the highest international standards in tax transparency, ensuring that the corporation tax code does not provide preferential treatment to any taxpayer, deliver tax certainty for business and maintain the 12.5pc rate.

The consultation period will run to April 4.

The review was announced in the wake of the EU's €13bn Apple tax decision
 

Clanrickard

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Yes .. sorry to hear this. I am on my own, just about keeping head above water. Im bemused by all this boom stuff coming from Dublin, feel like Im in a different country. Have had calls since early January to now from many of my really small SME friends in panic, wondering why its so quiet this year so far. Afraid it was them only, but it aint it seems ..
They could reduce, rates and PRSI for lower paid workers. Would help me no end. But the public service fat cats must be fed.
 

gleeful

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The term "foreign multinational" is a bit odd. All multinationals are mobile and subject to moving jobs and capital around, regardless of where their HQ is.
 

Sister Mercedes

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We rely on the Corp Tax they pay and on the Income Tax their employees pay. It would be a double whammy if they withdraw.

When's the last time the Montrose 6.1 news led with a story about small businesses? Never in my memory. The 1.4 million employed in SME's are second class citizens compared to the 300,000 employed in the public sector.
 

Sister Mercedes

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They could reduce, rates and PRSI for lower paid workers. Would help me no end. But the public service fat cats must be fed.
Lots of direct and indirect costs that are controlled by government policy or lack thereof: indemnity insurance, liability insurance, health and safety regs, other regulations and compliance costs, rents, legal fees, audit fees, insolvency costs, sickness and maternity, a national minium wage that is not suited for lower income parts of the country etc etc.
 

Mushroom

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They could reduce, rates and PRSI for lower paid workers. Would help me no end. But the public service fat cats must be fed.
I presume that you mean employer's PRSI? I completely agree. It's unfair to load an extra 8.5% on top of a minimum hourly rate of pay that is one of the highest in the EU.

As for 'feeding PS fat cats' are you aware that all PRSI goes into the Social Insurance Fund? It doesn't go anywhere near the PS fat cats!

However, rates are another story. :(

You didn't mention high rates of insurance - is this not another major headache for businesses?
 

Clanrickard

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I presume that you mean employer's PRSI? I completely agree. It's unfair to load an extra 8.5% on top of a minimum hourly rate of pay that is one of the highest in the EU.

As for 'feeding PS fat cats' are you aware that all PRSI goes into the Social Insurance Fund? It doesn't go anywhere near the PS fat cats!

However, rates are another story. :(

You didn't mention high rates of insurance - is this not another major headache for businesses?
Yes insurance is a biggie as well. The fat cats I was referring to revolved around rates. Sister is also spot on regarding professional fees. Daylight robbery but there is no way to escape them.
 

Mushroom

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Lots of direct and indirect costs that are controlled by government policy or lack thereof: health and safety regs, other regulations and compliance costs, sickness and maternity benefits, etc etc.
But how many of these come straight from the EU? There is a solution, but .......................
 

Clanrickard

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But how many of these come straight from the EU? There is a solution, but .......................
I have no problem with health and safety regs. It is not that onerous.
 

robut

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An interesting thought crossed my mind ..

With all these other charges and taxes to the SME .. mainly from Gov? .. These other charges and taxes are the reason their is no profit left to charge corporation tax on ... wanting cake and eat it?
 

wombat

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My reply is successive Irish Governments have concentrated on FDI but only and always paid lip service to local indiginous small to medium business. Not great support ..
The biggest impediment to developing Irish companies is lack of private capital. We do not have a functioning stock market as the Irish wealthy class prefer to invest in land or property rather than manufacturing industry. This is nothing new, it probably started after the act of union where the land owning ascendancy moved to London. After independence, the state developed the semi state sector to fill the gap left by the absence of local capitalists. They tried protectionism to develop industry and abandoned it when times changed. The IDA have been spectacularly successful in identifying sectors which are willing to locate in Ireland and when special tax arrangements for exports were banned, the govt reduced the corporate tax rate for all. Our problem is not with the successful policy of attracting FDI, it remains the Irish obsession with land and property rather than stocks and shares.
 

gerhard dengler

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Warning over foreign multinationals paying 80pc of corporate tax - Independent.ie PUBLISHED - 22/02/2017



I would imagine a substantial amount of indiginous small business, apparently backbone of the country, would pay little or no Corporation Tax because their is nothing left / no profit left to charge CT on after everything else is paid? (I am genuinely in this boat )

What does this tell us? If most CT is paid by Foreign Multinationals does it mean that most indiginous Irish SMEs are actually struggling, just about staying above water? OR are many/most actually "fiddling" the books some way to show no profit, which will probably be an accusation made by some here?

My reply is successive Irish Governments have concentrated on FDI but only and always paid lip service to local indiginous small to medium business. Not great support ..

To the broader Q - it would seem we are off again with eggs in one basket. One trick pony. Dependence on this "12.5%" corporation tax which now is under attack from EU, UK Brexit and Trump ( US may drop to 15% soon )

Thoughts PIE'ers ...
The percentage figure disclosed, 80%, tells it's own story for sure.
80% depicts at least a two tiered economy, one tier being FDI MNC's and the other tier being the indigenous sector.

But even this tiering is a misnomer because we know that the economic activity booked here by FDI MNC's, a lot of that activity is actually generated outside of Ireland. Therefore that activity doesn't generate income taxes for example in this jurisdiction. It doesn't generate VAT in this jurisdiction either. The only tax that economic activity does generate is CT for the state.

The wider implication of the 80% disclosure is that the generic/indigenous sector appears to be struggling.

One other thought is that our policy makers will be more open to lobbying from the FDI MNC sector.

This country really does need to create more sustainable industrial/economic policies
 

March Hare

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Yes insurance is a biggie as well. The fat cats I was referring to revolved around rates. Sister is also spot on regarding professional fees. Daylight robbery but there is no way to escape them.

Are these business expenses not tax deductible for the Revenue
 

Sister Mercedes

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The PS know this level of Corp Tax Receipts is unsustainable. Just like they knew the level of stamp duty tax receipts was unsustainable. But their motto is "make hay while the sun shines". In the years of booming tax receipts, they get contractual commitments on pay increases, lump sums, pensions, early retirement etc. Then when the boom has gone away they say "Not my problem. You're committed to paying me the money so cut elsewhere, increase tax elsewhere, but you can't touch mine."
 

Mushroom

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Are these business expenses not tax deductible for the Revenue
Problem is that you have to make a profit before "tax deductibility" can come into play.
 


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