Corporation tax in the Republic of Ireland

Corporation tax in the Republic of Ireland is a levy on a company's profits. The tax is charged on a company's income. The corporation tax in Ireland is relatively low by EU standards, and is often cited as an example of tax competition, as it is used as an incentive for foreign companies to invest in the state. This assertion is disputed by the Irish government.

There are two rates of corporation tax in the Republic of Ireland:

A special rate of 10% for companies involved in manufacturing, the International Financial Services Centre (IFSC) or the Shannon Free Zone ended on 31 December 2003.

A special rate can be applied to certain companies by way of an Advance tax ruling although such ruling may be classified as an illegal State aid by the European Commission.

Over the past decade, Ireland’s corporate taxation system has been a source of controversy with some of Ireland’s fellow-member states in the European Union. The French government has over the past decade, most particularly during the premiership of Lionel Jospin, consistently condemned and criticised the Irish corporation tax system. This criticism is based on the belief that the low corporation tax rates enabled Ireland to compete unfairly in attracting international investment. However, despite the French critique of the Irish corporate tax system, the Irish example has won many followers, with many 'emerging' and Eastern European economies following the Irish example.

It was only with the acceptance of the Anglo-Irish Treaty by both the Dáil and British House of Commons in 1922 that the mechanisms of a truly independent state begin to emerge in the Irish Free State. In keeping with many other decisions of the newly independent state the Provisional Government and later the Free State government continued with the same practices and policies of the British administration with regard to corporate taxation.

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