To ask the Minister for Finance if commercial rates are deductible for tax purposes; the tax rules in relation to commercial rates; if rates are deductible, the annual cost of the deduction; if not, the cost of allowing commercial rates to be deductible; and if he will make a statement on the matter.
I am advised by Revenue that, as a general rule, commercial rates are deductible for tax purposes.
When rates are levied on a person carrying on a trade or profession, the rates are deductible as they represent a cost of business and are therefore incurred wholly and exclusively for the trade or profession. This is in accordance with section 81 of the Taxes Consolidation Act, 1997, which sets out the general rules for deductions for the computation of profits or gains arising in respect of trades and professions.
Section 97 of the Taxes Consolidation Act, 1997 sets out the computation rules and allowable deductions for the computation of profits or gains arising in respect of rental income. Subsection (2) of that section includes a specific deduction for rates levied by local authorities.
In relation to the annual cost of deductions taken for commercial rates or the cost for the tax forgone, Revenue do not request this information from taxpayers when they are completing their tax returns and therefore such information is not available.
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