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Why can't we get 4.5% more from Corporation Tax?


Congalltee

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US firms paid tax rate of 8% on profits in Ireland - RTÉ News.

Ireland's Corporate Tax rate is the well known 12.5%. It has become a mantra that our politicians will defend to their dying breath (unless their pensions are on the line). It is a low tax rate. It offends many constant our EU partners and the US and we are criticized as a tax haven.

Why then, is the effective rate not the same as the headline rate? After all it is a tax on profits not turnover (which many journos don't seem to appreciate when they refer to google's revenue and the tax paid). Why do we allow accounting practices to reduce the tax revenue available by over one third? How many of the cuts could be reversed if we had an effective rate of 10% plus? (Or even reduce the rates or other taxes which are crippling SME's).

More info:
http://budget.gov.ie/budgets/2013/Documents/Budget%202013%20-%20Presentation%20on%20Corporation%20Tax%20and%20FDI.pdf


Call for Ireland to push ahead issue of common corporate tax base - Irish News, World News & More | The Irish Times - Fri, Jan 11, 2013

Increasing corporate tax rates: what was sauce for Cyprus is toxic for Ireland | NAMA Wine Lake
 

drummed

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Ever heard of capital allowances? Ever do a tax computation? Its a bit more complex when you get past intercert accounting. You'll see that in time.

There's a lot of stuff you can deduct from profits which makes the actual final figure very different to the figure in the accounts for tax purposes. This is fairly basic stuff poster. Your grasp of consolidated accounts/tax is non existant i'm afraid.:(
 

Congalltee

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Ever heard of capital allowances? Ever do a tax computation? Its a bit more complex when you get past intercert accounting. You'll see that in time.
Yes. No. What's an intercert? Thanks - do tell.

Can I claim a capital allowance on my LPT? If corporations sign up to a low headline tax rate - why should we allow them keep more than 7/8ths of their profits? (When I can't keep more than 52% of my income after a certain threshold)
 

james5001

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Ever heard of capital allowances? Ever do a tax computation? Its a bit more complex when you get past intercert accounting. You'll see that in time.

There's a lot of stuff you can deduct from profits which makes the actual final figure very different to the figure in the accounts for tax purposes. This is fairly basic stuff poster. Your grasp of consolidated accounts/tax is non existant i'm afraid.:(
Is that something to do with computers?
 

General Urko

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To answer the OP's headline as in our dealings with our European masters because our spineless politicians are afraid!
Don't forget these orgs also receive massive training and other grants from the tax payer as well!
I saw somewhere where it can cost around 20K in total per job created!
 

drummed

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To answer the OP's headline as in our dealings with our European masters because our spineless politicians are afraid!
Don't forget these orgs also receive massive training and other grants from the tax payer as well!
I saw somewhere where it can cost around 20K in total per job created!
The tax lawyer is explaining it in terms the OPer will understand. Close the thread and save us all the inevitable stupidity which will occur otherwise.
 

james5001

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Nothing to do with them. Its simply a calculation of tax liability. To compute the tax?
You may be good at making jokes but sometimes you're not great at picking up on them.
 

drummed

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Yes. No. What's an intercert? Thanks - do tell.

Can I claim a capital allowance on my LPT? If corporations sign up to a low headline tax rate - why should we allow them keep more than 7/8ths of their profits? (When I can't keep more than 52% of my income after a certain threshold)
You have no concept whatsoever how the tax system works. In fact i very much doubt you even have basic maths skills.
I have no intention of wasting my evening explaining it to you. Go to your local library. Get a book on corporation tax. Read it.

Or better, get somebody to read it to you.
 

drummed

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You may be good at making jokes but sometimes you're not great at picking up on them.
Apologies. I rarely attempt humour. I attempt sarcasm.

But this guy is so ignorant of the topic he wishes to debate there's little point in taking him seriously.
 

stopdoingstuff

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And note that not only can some losses and charges be carried forward but they can even be carried back. They can also be set against non trade income on a value basis. Aye, thar be many tricks to the trade.
 

drummed

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Right back, the other threads are that bad!

Ok poster. When you calculate corporation tax you don't simply multiply the rate by the profit in the accounts. You do realise this i presume?

The figure you pay tax on is not the profit in the accounts.
 

Fides

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The state allows corporations tax breaks in certain areas as it believes these will be of benefit to the economy. Capital allowances mentioned earlier is one - encouraging businesses to invest in productive assets. Different states end up encouraging different things and global corporations take advantage of that.

I'm actually kinda impressed they pay 8%. I thought it was lower than that. And when you think much of this 8% is on profits not earned here and all part of transfer pricing we're doing quite well. That all may end in the near future if rules on paying tax where the profits are actually earned take hold.
 

Congalltee

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Apologies. I rarely attempt humour. I attempt sarcasm.

But this guy is so ignorant of the topic he wishes to debate there's little point in taking him seriously.
You obviously take yourself far too seriously. Hopefully you'll find threads worthy of your input (or look up the consequences and operation of a flat tax after you get over your self-important huff)
 

General Urko

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I betcha there are very few Irish business people (maybe a few well connected to the famous gene poo,l FF sleeveens and of course our tax exiles who should be stripped of their passports and forbidden ever under pain of a life prison sentence from ever setting foot here again for any reason) paying 4.5% CPT or getting massive training and location grants!
 

Tea Party Patriot

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Right back, the other threads are that bad!

Ok poster. When you calculate corporation tax you don't simply multiply the rate by the profit in the accounts. You do realise this i presume?

The figure you pay tax on is not the profit in the accounts.
Is there any point in trying to explain to the OP things like contingent liabilities, revaluation reserves, the difference between depreciation and capital allowances, provisions for bad debts, valuation of stock, off balance sheet entities, or the myriad of other things that are totally and utterly subjective in a set of financial accounts.
 

Congalltee

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The figure you pay tax on is not the profit in the accounts.
What would be so objectionable about a flat and transparent tax of 12.5%* on profits in the accounts?

(*Or a lower rate if the effect of applying a different accounting standards/tax liability computation scares the horses)
 

Tea Party Patriot

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And note that not only can some losses and charges be carried forward but they can even be carried back. They can also be set against non trade income on a value basis. Aye, thar be many tricks to the trade.
Indeed opting to average profits can be a useful tool, particularly for companies trading is volatile markets.
 
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