Corporation Tax
Corporation Tax
| Corporation Tax - Standard Rate | |
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| Standard Rate* - from 1/1/2003 to 2007 | 12.5% |
| Standard Rate* - from 1/1/2002 to 31/12/2002 | 16% |
| Standard Rate* - from 1/1/2001 to 31/12/2001 | 20% |
| Standard Rate - from 1/1/2000 to 31/12/2000 | 24% |
| Standard Rate - from 1/1/99 to 31/12/99 | 28% |
| Standard Rate - from 1/1/98 to 31/12/98 | 32% |
| Standard Rate - to 31/12/97 | 36% |
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* applies to a company's trading income |
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| Corporation Tax - Reduced Rate | |
| From 1 January 2003, there is no need for a separate reduced rate, as the mainstream rate is now also 12.5%. However, we will keep the old "reduced" rates here for accounts being prepared for periods where the reduced rates are relevant. | |
| from 1/1/2002 to 31/12/2002 - Reduced Rate* (less than €254,000) | 12.5% |
| from 1/1/2001 to 31/12/2001 - Reduced Rate* (less than £200,000) | 12.5% |
| from 1/1/2000 to 31/12/2000 - Reduced Rate* (less than £50,000) | 12.5% |
| from 1/1/1999 to 31/12/2000 - Reduced Rate** (on first £100,000) | 25% |
| from 1/1/1998 to 31/12/1998 - Reduced Rate** (on first £50,000) | 25% |
| to 31/12/1997 - Reduced Rate** (on first £50,000) | 28% |
*Where the company's TOTAL trading income is less than €254,000/£200,000 for 2002 and 2001. Marginal Relief will apply where the total trading income is between €254,000/£200,000 and €317,500/£250,000 (Year 2000 - £50,000 and £75,000). ** Prior to 1/1/2000, every company paid some tax at a reduced rate on a portion of their profits. This contrasts with the situation from 1/1/2000 where a companies' total profits must be within the relevant levels. |
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| Non Trading Income | Non-trading Income - 25% Tax From the year 2000, non-trading income will be taxed at 25%. This will apply to ALL companies. This will include: - deposit interest - interest on government securities - discounts - foreign income (unless this is part of an Irish trade) - rental income from land and buildings in the Republic - royalties - miscellaneous income - profits from the exploitation of oil - gas and mineral resources - all other Schedule D Case 3,4 and 5 income |
| Loss Relief | |
Currently, income earned by corporates is taxable in two streams:
This is to be done on a value basis. This means that the Trading loss will be converted mathematically to an equivalent non-trading loss. For example, when the standard corporation tax rate on trading income is 12.5%, half of the trading loss will be allowed against income taxable at the 25% rate. The amount of the loss will be deemed to be fully used up in this scenario. |
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| Shipping Tax | |
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Qualifying shipping activities will be subject to a special tonnage tax regime instead of the normal corporation tax regime for accounting periods ending on or after 1st January, 2002.
Basically, profits will be calculated according to a specific profit per day related to the tonnage of the ship involved. The standard rate of Corporation tax (16% for 2002) is then applied to the profits. This measure will require EU approval. |
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| Motor Expenses | |
| The Finance Bill 2002 has abolished the limit that previously existed for motor expenses from 1 January 2002. Where the expenses are for business purposes, they are fully allowable.
The limit has also been removed for income tax purposes. |
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| Withholding Tax | |
| From the 6/4/1999 Advance Corporation Tax has been abolished. Dividends and other distributions are now subject to withholding tax at the standard income tax rate.
The tax is payable by the company one month after the dividend payment date. |
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| Capital Allowances | |
Business Cars
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| Plant & Machinery
For expenditure incurred on or after 4 December 2002*, the period over which the "wear & tear" capital allowance for plant & machinery is claimed is being increased from five years to eight years. This means that plant and machinery will get a 12.5% allowance over eight years rather than a 20% allowance over five years on cost, which will slow down the process of claiming tax relief on machinery you buy. This provision, introduced in the budget for 2003, also applies to business motor vehicles (excluding taxis and short-term hire vehicles). The previous change to P+M capital allowances occurred when the write off period was decreased from seven years to five years from 1 January 2001. To simplify matters, you were allowed pool the tax written down value of P+M at 1 January 2001 and write off over five years. Thus assuming you carry out this pooling, the write off periods are as follows:- pre 4 Dec 2002 - write off over five years post 4 Dec 2002* - write off over eight years ============ * = except where a binding contract is evidenced in writing before that date and the expenditure is incurred by 31 January 2003. Balancing Charges The Finance Bill 2002 will provide that no balancing charge will be made in respect of capital expenditure on plant and machinery where the disposal proceeds for the plant or machinery is less than €2,000. The changes will apply to balancing charges occurring on or after 1 January 2002. |
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| Childcare Facilities From 2 December 1999, 100% capital allowances are now available in "Year One" on the construction of childcare facilities. Here are some relevant points:-
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| R+D Tax Credit | |
| Budget 2004 saw the announcement of a new tax credit for companies engaging in R+D activities.
Relevant points are as follows:
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| Companies Capital Duty | |
| Budget 2005 saw the 1% duty that is charged on the issuing of share capital reduced to 0.5% from 2 December 2004. Following on from Budget 2006, this duty has been abolished completely (from Dec 7, 2005).
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