Second, there’s much debate on Ireland’s 12.5% tax rate, and rightly so, but the bigger issue concerning this rate was highlighted by me based in my report on the Irish Congress of Trade Unions and for the TUC entitled “Pot of Gold or Fool’s Gold?” . The reality is that due to lax rules on transfer pricing, the taxing of dividends and controlled foreign companies it does not really matter what the tax rate is in the Republic – the tax base is or will always be close to zero and as such the rate becomes almost irrelevant.
By EU standards, Ireland is a low tax jurisdiction overall, and because of the Exchequer deficit and the cost of the bank bail-out, that will have to change. But we are not a low Corporation Tax jurisdiction. Ireland’s Corporation Tax take as a percentage of GDP was 2.9% in 2008. By comparison, Germany’s Corporation Tax take for the same year was only 1.1% of GDP.
So what’s Germany’s excuse then? What with them having a higher rate of corporation tax and all that?