Sir, – A 2.5 per cent increase in Ireland’s headline rate of corporation tax to 15 per cent may not necessarily be the disincentive for international corporations to locate and remain in the Republic that it first seems.
It’s one thing for a country to raise its headline rate of tax, it’s a different matter whether this leads to higher payments of tax. If anything, a headline rate of tax can be seen as being more for populist and international consumption – the Government can, if it wishes, tweak the deductions,allowances and incentives made in computing taxable profits to ease the pain of a higher headline rate, and by so doing can produce an effective rate of tax that’s still palatable to international bean counters. For example, might the long-standing (and often overlooked) 25 per cent tax rate that currently applies to passive (non-trading) income in Ireland now be reduced to 15 per cent? The danger is that other countries might now start shifting their rates downward towards 15 per cent. – Yours, etc,
R BLACKBURN,
Naul,
Co Dublin.