The British-Irish Chamber of Commerce has called for the establishment of an office for tax reform to recommend and advise the Government on how to simplify what it described as “the burdensome nature of Ireland’s tax system on businesses”.
The business advocacy group called for a new agency modelled along the lines of the UK’s Office of Tax Simplification, which provides independent advice to the UK government on simplifying the tax system there.
In a submission to the Commission on Taxation and Welfare, the chamber said a new body was needed “to alleviate unnecessary time delays and costs imposed upon businesses by the layering of additional rules in recent years”.
It said the introduction of new obligations such as the anti-tax-avoidance directive and the OECD’s Base Erosion Profit Shifting (Beps) measures without reforming the wider tax system are leading to unnecessary confusion and contradictions between tax rules.
The chamber also called on the commission to consider reforms to the personal tax regime including changes to the marginal income tax rate, which kicks in at relatively low levels of income, and the introduction of a more robust R&D tax credit to ensure Ireland remains an attractive place for talent and entrepreneurs to be in.
Taxpayers here are paying personal tax at marginal rates of 48.5 per cent on salaries above €36,800 and 52 per cent on salaries above €70,044, which are among the highest rates in the world.
“The tax system continues to be a crucial factor determining Ireland’s future competitiveness,” Paul Lynam, deputy director general of the chamber, said.
“From helping to attract top international talent to our island to enabling indigenous businesses to grow, it can secure the recovery that has taken hold,” he said.
Location of choice
“But with global tax changes impacting upon our FDI model, it’s vital that we shore up Ireland’s global offering. Simplifying the complex tax system for businesses and addressing the tax burden on employees are two key tools in securing Ireland’s position as a location of choice for investment,” he said,
“Today too many indigenous firms find themselves restricted by overly complex tax rules which are in urgent need of reform,” he said.
The taxation commission, the body set up to look at various ways the State can fund itself into the future, received more than 200 submissions as part of the public procurement process ahead of its deliberations.