IRELAND’S top exporters, led by US multinationals, pay an effective tax rate that matches the headline corporation tax rate of 12.5%, according to new research that debunks accusations the country is being used as a tax haven by companies such as Apple and Google.
The analysis, compiled by Stubbs Gazette for the Irish Exporters Association, compared the tax charge reported in the audited accounts of the top 250 exporters with their pre-tax profits. “Our initial analysis showed the average tax rate was 20% of profits before tax,” said James Treacy, managing director of Stubbs. “Discounting foreign withholding taxes, which are not paid to the Irish state, the reported tax rate comes closer to 12.5% — much higher than some reports of an effective rate as low as 2%.”
Microsoft was the largest taxpayer. It reported a charge of €98.9m for the year to June 2013. Business Objects, owned by German software giant SAP, paid €68.8m. Smurfit Kappa reported a tax charge of €71m, while Google Ireland paid €34.5m.
The findings corroborate separate research prepared for the Department of Finance earlier this year, which found the tax rate paid by companies in Ireland is just under 11%. The analysis by Seamus Coffey, an economics lecturer at University College Cork, was based on data from Revenue and the Central Statistics Office.
The CSO figures showed an average effective corporate tax rate of 10.9% over the past 10 years and a rate of 8.4% for 2012. Revenue data showed a rate of 10.7% over the past 10 years and 10.4% for 2012.
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Ireland has been coming under increasing international scrutiny over its low rate of corporation tax, with the European Commission announcing over the summer that it would open a formal investigation into Apple’s tax arrangements here.