Corporate tax or company tax is basically the tax imposition implicated for companies operating in a certain jurisdiction of a country whereupon the tax is imposed on the company's earnings. Ireland became a target for many business entities to set up their companies, franchises or branches because of the recent developments in the Irish business landscape. When considering the favourable factors for doing business in Ireland, the main point of interest that most companies' eye is the taxation regulations in that particular geographic location. Though the Irish government imposes strict regulations on auditing and financial reporting (to avoid fraudulent activities, credit crunches or a potential financial crisis), it is a matter of observation that the tax impositions are often comforting for most corporate entities. The availability of low corporate tax which is at 12.5% (for trade income) and 25% (for non-trade income) has largely influenced companies to target the Irish Market.
Being a business-friendly market, Ireland has become a homing ground for many consultancies to embark on an uprising as a jump start in their business life cycle. These consultancies provide various regulatory compliance and tax payment services to companies in order to simplify the administrative work for the newly established companies. Therefore, creating a systematically functioning, cohesive and coalesced business ecosystem that supports one another living by the modern business mantra that is being preached around the world which is ‘collaboration over competition.
With that being said, here are some tips for filing corporate tax in Ireland –
1. Identify the types of Tax Impositions
Taxes are imposed on the different types of profits that a company or a legal corporate entity earns hence, it is important to identify what kind of taxes can be imposed on the different variable gains such as –
- Profits from business activities – from Ireland and Abroad
- Gains from Returns on Investments
- Asset sale with additional increment on sale value – revaluation account for the asset must be created
Taxes can be implied on all the above-mentioned profits or gains.
2. Register for Corporate Tax
The Revenue Commissioners Office in Ireland is the Alpha Administrative body blanketing the Irish Market with its regulations to ensure that all businesses report their activities and maintain the necessary business ethics for earning profits. The Revenue Commissioners Office maintains tax regulations in Ireland and therefore, it is mandatory that the tax agents or company secretaries representing a firm must submit an online tax application for being eligible for paying taxes. The Revenue Office will also demand the Companies Registration Office (CRO) number from the taxable entity that acts as a unique identification for maintaining data and records about the company. Apart from Corporate tax, the Revenue Office also charges taxes on different scenarios of business activities –
- Some taxes such as VAT are charged once a company crosses a certain monetary threshold.
- Similarly, there are different taxes that are imposed on different occasions such as Employer PAYE (Pay as You Earn) tax that is charged on the salaries paid by the employer to the employee personnel.
- The Relevant Contract Tax (RCT) is charged for contractors when they take up various construction contracts.
3. Documentation is a Very Important
The Revenue Office in association with the Irish Auditing and Accounting Supervisory Authority (IAASA) has created a mandate for companies to maintain their accounts and documents for a probation period of 6 years. This is to ensure that in any case of any investigative necessity regarding audit compliances or accounting defaults or tax evasion, these documents can be utilized by the Revenue Office. Often the responsibility of documenting anomalies in company financial statements is upon the shoulders of the tax officer or internal auditing entity. The company secretary or nominee directors are responsible for documenting the discussions in annual general meetings regarding operations and earnings post which they must report the ethical functioning of the board of directors.
4. Maintain Payment regularity habits prior to deadlines
In many cases, corporate taxes are imposed inclusive of preliminary payments and final payments. Companies must pay due to taxes under mandatory e-filing on the Revenue Online Service (ROS) and this process follows a certain discipline of steps that companies must abide by such as –
- Calculating the preliminary tax
- Payment before the due date – nine months after the end of the accounting period
- Filling online form for applying to pay any due taxes
- Payment of the due taxes before the return filing date
In any event of late payments, then companies will be liable to pay surplus charges or fees subject to the delay of tax payments.
5. Filing Timely Tax Returns
A tax return is a claim of financial status made by a company or entity to ensure its legitimate liability towards the amount of taxes it is paying. In order for companies to avoid any surplus payments or avoid being charged for delay in filing, the tax officers of the company must ensure that the company is filing the tax return on a timely basis. Disciplinary assessment of tax return filing will allow companies to maintain a fixed expenditure of tax payments rather than having unwanted fluctuations such as underpayment or overpayment of taxes that could result in the company getting into legal issues.
Running a business does not only mean focusing keenly on market operations and core business activities but it is also important to maintain effective corporate governance by complying with the regulations of the administrative authorities in the geographical boundaries where the business is operating. In the case of Ireland, the primary governing bodies that allow companies to function in Ireland are – Companies Registrations Office (CRO), Revenue Commissioners Office of Ireland and Irish Auditing and Accounting Supervisory Authority (IAASA). These institutions shape the gateway to the market and govern entire corporate administrations that dominate the Irish Economy. If you are an aspiring business professional and are looking forward to setting up a business in Ireland, then feel free to contact us to know more about the Irish Market and let us assist you in your endeavours to set up a business.