According to a report produced by PwC, the World Bank and the IFC entitled 'Paying Taxes 2014 - the global picture', Irish companies pay an average of 12.1% of total commercial profit in labour taxes, ranking as one of the lowest rates in the EU. Labour taxes represent 47% of the total taxes paid by companies in Ireland, compared to 65% of the total tax take for the EU region.

    Speaking about the analysis at PwC's December Employment Tax Forum, Mark Carter, HR Services Partner, PwC Ireland, said: "Companies in Ireland pay just over one eight of their total commercial profit in labour taxes, equating to just less than half of total taxes paid. Ireland is therefore more competitive than many of our European counterparts when it comes to employment tax cost for companies and this is an important feature for continuing to attract foreign direct investment."

    In 2012 corporation profits taxes amounted to 37% of the global Total Tax Rate whereas Labour Taxes, which are borne in all but 1 of the 189 countries surveyed, now account for the biggest slice of the Total Tax Rate at 38% globally.

    Ken O'Brien, Director, PwC HR Services added: "Apart from the labour taxes directly borne by business, employers in many countries act as part of a significant tax collection machinery in relation to the billions in PAYE or equivalent Wage Withholding Taxes which they gather as unpaid tax collectors on behalf of governments. In addition, while generally not thought of as being borne by the business in addition substantial additional sums often up an as additional business cost when the PAYE Inspector comes knocking on the door as many employers often pick up additional workers’ tax and social security contributions which arise as a result of Revenue Audits. What we are seeing around the world is an increased focus on such taxes by Revenue authorities who increasingly have come to view the additional tax yields from PAYE/PRSI and their equivalents as somewhat easy pickings".

    Country Total Tax Rate (%) ** Labour taxes (%) % Labour taxes as % of Total   Tax Rate
    Denmark 27% 3.6% 13.3%
    United Kingdom 34% 10.6% 31.1%
    Malta 41% 10.7% 26.1%
    Cyprus 22.5% 12.0% 53.3%
    Ireland 25.7% 12.1% 47%
    Luxembourg 20.7% 16% 77.3%
    Switzerland 29.1% 17.8% 61.1%
    Portugal 42.3% 26.7% 63%
    Germany 49.4% 39.4% 80.0%
    Italy 65.8% 43.4% 66%
    France 64.7% 51.7% 80%
    EU 41.1% 26.5% 64.4%
    North America 41.4% 17% 41.0%
    Global 43.1% 16.3% 37.8%

    ** Total Tax Rate comprises the total of profit taxes, labour taxes and other taxes and represents the tax rate paid on commercial profits.

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