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The rate of Corporation Tax in Ireland is currently 12.5% - Leaving Cert Economics - Question 3 - 2015
Question 3
The rate of Corporation Tax in Ireland is currently 12.5%. Explain the underlined term and outline one possible reason why the Irish Government retained the rate at ... show full transcript
Worked Solution & Example Answer:The rate of Corporation Tax in Ireland is currently 12.5% - Leaving Cert Economics - Question 3 - 2015
Step 1
Explain Corporation Tax
Answer
Corporation Tax is a tax on the profits made by businesses operating in Ireland. This tax is levied on the income of corporations after deducting allowable expenses. The rate of Corporation Tax in Ireland, currently set at 12.5%, is one of the lowest in Europe, which has positioned the country as an attractive location for multinational companies seeking to maximize their profit margins.
Step 2
One possible reason why the Irish government retained the rate at 12.5% in Budget 2015
Answer
One reason the Irish government retained the Corporation Tax rate at 12.5% in Budget 2015 was to continue attracting foreign direct investment (FDI) into Ireland. This competitive tax environment enables businesses to retain more profits and thus encourages them to invest and expand their operations in the country. By maintaining this rate, the government aimed to foster economic growth and create jobs, ultimately improving the overall financial standing of the government through increased tax revenues derived from various taxes linked to increased economic activity.