Taxation

• Tax is a levy charged by the government to individuals and businesses to finance expenditure.
• Tax can be direct (income tax) and indirect (VAT).
• Income Tax in Ireland has two rates- a higher and standard rate.
• People can claim tax credits for income tax.
• Forms involved in Income Tax include Form 12a for joining the PAYE system and Form P12 for a tax return.
• Corporation Tax in Ireland is 12.5%.
• Corporation Tax can be reduced by buying fixed assets (capital allowances), claiming back interest on borrowings, locating the company in tax-designated areas and raising money via tax incentive schemes.
• VAT is an indirect tax charged on the sale of goods and services.
• Businesses must register for VAT if their sales reach a certain amount.
• Businesses must charge VAT but can also claim it back on goods that they buy.
• The VAT period lasts two calendar months so VAT must be paid 6 times each year.
• The business must submit a form called VAT 3 when VAT is due.
• The rate for VAT varies depending on the good or service sold.
• Capital Gains Tax in Ireland is 20%.
• Single people have a tax credit of €1270 for Capital Gains Tax while a married couple have €2450.
• Capital Acquisitions Tax in Ireland is paid by any person who receives a gift or inheritance.
• The rate of Capital Acquisitions Tax to be paid depends on the relationship to the person sending the gift.
• There are some exemptions from Capital Acquisitions Tax, such as any gifts or inheritances between spouses, small gifts up to €1270 per year, any charitable donations and reasonable payments paid between a family for education, support or maintenance payments.
• Excise duties are taxes on certain goods such as alcohol and tobacco.
• Motor Tax is a tax on all vehicles that are roadworthy.
• Deposit Interest Retention Tax (DIRT) is a tax paid on interest earned from saving money in a bank.