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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 ... 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 the underlined term
Answer
Corporation Tax is a tax on the profits made by businesses operating within a country. In Ireland, the current rate of Corporation Tax is set at 12.5%, which is often seen as competitive within the EU. This tax applies to the net income that companies generate after deducting allowable expenses. The lower tax rate is designed to incentivize businesses to operate and invest in Ireland.
Step 2
One possible reason why the Irish government retained the rate at 12.5% in Budget 2015
Answer
The Irish government decided to retain the Corporation Tax rate at 12.5% to continue attracting foreign direct investment (FDI) into Ireland. By maintaining a competitive tax environment, Ireland seeks to encourage multinational companies to establish their operations there, thereby creating jobs and boosting economic growth. This strategy helps in fostering an attractive business landscape, which in turn can lead to increased government revenues through various taxes.