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Policy Information

Taxation

Last updated: 8 February 2019
Published: 19 December 2018
From: Department of Finance

Introduction

The government recognises the need to keep the tax and revenue base broad, while reducing the rate of tax on work, and other activities, in order to achieve specific social and economic objectives.

The amount of tax paid can depend on:

  • residence status
  • income
  • where duties of trade, profession or employment take place

Income Tax

Income tax is a tax on earnings and it is used to fund state expenditure.

Ireland has a progressive income tax system. This means that those on higher incomes pay proportionately higher rates of tax than those on lower incomes.

More information on the current rates of income tax, can be found on Revenue's website.

Corporation Tax

It is imperative that Ireland maintains its commitment to sustaining an attractive, stable corporate tax regime.

Ireland’s corporation tax regime is a core part of the economic policy mix and is a longstanding anchor of the country's offering on foreign direct investment (FDI).

Certainty, transparency and a commitment to open engagement with stakeholders are cornerstones of the corporate tax regime.

More information on corporation tax can be found on Revenue's website.

Value-Added Tax

Value-Added Tax (VAT) is applied to consumer spending. Certain goods and services supplied in Ireland are subject to VAT.

Goods that are imported into Ireland, from outside the EU, are also subject to this tax. VAT is charged at the point where the goods enter the State.

Excise Duty

Throughout the EU, certain goods and activities are subject to excise duty. Excise duty is levied at the moment of manufacture of locally produced goods, rather than at sale.

Excise duty may apply to goods and activities such as:

  • alcohol
  • tobacco
  • excise licences (licences to sell or manufacture alcohol)
  • sugar-sweetened drinks
  • betting duty
  • mineral oil tax
  • electricity and other energy products

Ireland has some of the highest rates of excise duty on alcohol products in the EU. This reflects a long-standing policy to support public health objectives.

Environmental taxes

Taxation is an important policy tool towards achieving a reduction in greenhouse gas emissions and the price of carbon.

Ireland has a regime of carbon taxes in place. Carbon taxes place a price on carbon dioxide (CO2) emissions, which provide a financial incentive to reduce consumption of fossil fuels. Carbon taxes also increase the financial incentive for investment in cleaner energy alternatives.

Ireland has a 2020 target to reduce greenhouse gas missions. This is not going to be achieved and it will be necessary to purchase compliance by way of carbon credits.

As part of an EU wide target of a 40% reduction in greenhouse gas emissions by 2030, Ireland has been given a target of a 30% reduction on 2005 levels.

If these targets are to be met, they will require a fundamental policy shift to reposition Ireland as a low carbon economy.