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Irish tax system top ‘for ease’

Ireland’s tax system is the best in Europe and the fourth-best in the world in terms of the ease in dealing with local tax authorities, according to a global survey by accountants PwC.

PwC said its global league table takes account of the overall taxes companies pay but also compares a range of significant factors — such as the frequency of paying taxes to the tax authority, the ease and complexity of dealing with the tax authority through electronic reporting, and the efficiency for the company of securing refunds for sales or corporation taxes from the tax authority.

The survey places Ireland above Denmark, Finland, Estonia, Latvia, and Lithuania, as well as Switzerland, the Netherlands, Luxembourg, and the UK in the league table for the ease of paying taxes in Europe.

Further afield, it is only bettered by Bahrain, Hong Kong, and Qatar for the ease of paying taxes.

The survey is based on surveying privately held, Irish indigenous companies, and the country’s high ranking may reflect the investments in online technology by Revenue in recent times.

The survey found that the average privately held Irish firm spends 82 hours, or over two weeks a year, in complying with tax returns in making a business tax payment.

That compares with an average of 161 hours that companies took to comply in the EU, and the average of 234 hours taken across the world.

The survey also found that the Irish firm pays just over 26% of its profits to meet all sort of taxes — including labour and commercial rates — compared with an average of almost 39% in the EU and over 40% across the world.

“Irish Revenue has made significant investments in technology in recent years and this has allowed the majority of business taxpayers to utilise electronic filing of tax returns and payments, driving efficiency in compliance for both the tax authority and taxpayers,” said PwC tax partner John Murphy.

He said real-time reporting for PAYE and plans for real-time systems for the dividend withholding tax and Vat may deliver more benefits for companies.

PwC said that efficiencies in tax-collection systems help boost investments. “The more efficient a tax system, the better it is for business,” said Susan Kilty, PwC Ireland head of tax.

“This, in turn, helps promote economic growth and investment.”

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