Ireland Rules Out Corporate Tax Hike

Finance | November 19, 2010, Friday // 14:45|  views

Undated file picture of the Governor of the Irish Central Bank, Patrich Honohan. Talking to Irish radio RTE on 18 November in Dublin Honohan said he expected talks between the IMF, ECB and EC to result in a 'substantial' loan for Ireland. Photo by EPA

The Irish government has denied speculations that it will raise the country's low corporate tax under pressure from France and Germany and in return for a European Union-led bail-out.

"The 12.5% rate is non-negotiable," Deputy Prime Minister Mary Coughlan said on Thursday, as cited by BBC.

The Republic's low corporate tax has been criticized by other EU nations, who argue that it gives the country too much of an advantage in attracting overseas investment.

They now argue that the Republic should not be allowed to solely rely on a bail-out, and that it should instead raise the tax rate to help boost government funds.

The Financial Times on Friday reported a French official describing it as "almost predatory".

However, the Republic's European Minister Dick Roche, also insisted that the corporate tax rate was "certainly not up for negotiation".

He told the BBC: "There has been some very unhelpful chatter in the background in the last few days about our corporation profit tax.

"Where would be the sense of destroying one of the great drivers of growth?"

EU, European Central Bank, and IMF officials arrived in Dublin on Thursday to discuss the country's debt crisis, and what aid the country required.

The Republic's Central Bank Governor, Patrick Honohan, said he expected a loan in the region of "tens of billions" of euros.

Ireland's corporate tax rate currently stands at 12.5%,  much lower than the EU average, but still higher than Cyprus and Bulgaria.

Bulgaria has the lowest personal and corporate income tax in the EU at 10%, which was introduced at the beginning of 2008, replacing the previous system, which combined several different tax rates - between 20 and 24%, depending on income.

Bulgaria also has the lowest social security rates, which coupled with a 10% flat rate, makes it very attractive for physical entities, employers and potential investors.

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Tags: Dick Roche, Cyprus, Bulgaria, bailout, Eurozone finance ministers, Simeon Djankov, European Commission, European Central Bank, IMF, Dublin, ireland, EU-IMF troika team, ECB, International Monetary Fund, Patrick Honohan, Irish government, corporate tax rate, debt crisis, Dublin, Mary Coughlan, corporate tax, tax rate


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