Scope of Corporation Tax
Irish Corporation tax is charged on the profits and gains of an Irish resident company. It is also charged on the profits and gains of an Irish branch of a non-resident company.
Profits refer to all categories of income. In broad terms, the rules applicable to the ascertainment of income for income tax purposes, also apply to corporation tax. There are no allowances as such against corporation tax.
The basic rate of corporation tax in the Republic of Ireland is 12.5%. The rate also applies to foreign dividends paid out of qualifying trading profits.
This rate has applied for over 20 years and prior to that, a lower 10% rate applied in certain sectors including manufacturing many IT financial and other services. At an earlier point, all export sales were tax exempt.
The Irish 12.5 % corporation tax and its predecessors is a cornerstone of Irish industrial policy and has been consistently defended and maintained by all Irish governments over the last 50 years.
Tax policy in the European Union practice is a State competence. Almost all political parties have been resolute at all times in maintaining this rate.
A higher 25% rate applies to non-trading income, including investment income and income from certain “excepted” trades. Broadly speaking excepted trades are mineral and mining, land use, development construction operations and petroleum activity.