When it comes to individual taxation, Ireland is ranked the second worst of the OECD countries, according to an influential report from the American think tank, the Tax Foundation.
The Tax Foundation’s report ranked Ireland 37th of the 38 Organisation for Economic Co-operation and Development (OECD) member states in the category of individual taxation, describing its personal tax rate on dividend income of 51 percent as “the highest among OECD countries” and labelling it a major weakness of the Irish tax system.
The other key weaknesses identified in the Irish system of taxation included one of the highest VAT rates in the OECD (23 percent), which the Tax Foundation noted “applies to a relatively narrow tax base, subject to one of the highest VAT thresholds,” as well as corporations’ limited ability to write off their investments.
The worst-ranked country in terms of individual tax as identified by the Tax Foundation was South Korea, which in addition to having a high personal tax rate on dividend income (44.5 percent, against an OECD average of 24.7 percent), levies a surtax on personal income.
The report, the Tax Foundation’s International Tax Competitiveness Index 2025, is a relative ranking of the competitiveness and neutrality of the tax code in each of the 38 OECD countries, making use of dozens of variables across five categories: corporate income tax, individual taxes, consumption taxes, property taxes, and cross-border tax rules.
On the basis of that analysis, Ireland was given an overall ranking of 31st out of the 38 OECD countries, an improvement of two levels on 2024’s 33rd position.
Ireland was judged to perform most favourably in the category of corporate tax, where it secured a position of 5th, owing largely to its low corporate tax rate of 12.5 percent, which is second only to Hungary’s nine percent rate.
“Net operating losses can be carried back one year and carried forward indefinitely, allowing companies to be taxed on their average profitability,” the index’s author wrote in a section analysing the strengths of Ireland’s tax system.
High tax rates on corporate income or multiple layers of tax rules that contribute to complexity usually contribute to a country ranking poorly in the international index, the Tax Foundation highlighting that the five countries at the bottom of the rankings all have higher-than-average combined corporate tax rates.
However, despite its low corporate tax rate, Ireland also ranked poorly, a fact attributed by the Foundation to its “high personal income and dividend taxes and a relatively narrow VAT base”.
Across the other categories, Ireland ranked third-worst (36th) for ‘Consumption Taxes’, which are those levied on on individuals’ purchases of goods and services, such as VAT, while it ranked 18th and 28th for Property Taxes and Cross-Border Tax Rules respectively.
The Tax Foundation describes itself as “the world’s leading nonpartisan tax policy nonprofit,” and produces research, analysis and education aimed at promoting taxation policy in the US and abroad that results in greater economic growth.
The Tax Foundation’s International Tax Competitiveness Index for 2025 can be viewed in full via the link here.