The favourable provisions introduced in the Budget and as outlined in the Update on Ireland’s International Tax Strategy:
- Further increase the attractiveness of Ireland as a location to carry on business,
- Detail the Irish Government’s objective to actively contribute to the OECD BEPS process including the implementation of the appropriate actions,
- Illustrate the Irish Government’s desire to work with its EU and international tax partners to increase transparency in the taxation of the corporate sector, and
- Show that the Irish Government is committed to getting Ireland “Brexit ready”.
Some of the favourable measures detailed by the Minister are as follows:
Commitment To The Irish Corporation Tax (“CT”) Rate Of 12.5%
The Irish Government remains committed to the Irish corporation tax rate of 12.5%.
The Minister advised: “I want to now state that Ireland’s 12.5% corporation tax rate will not be changed and nobody is asking for it to be changed”.
Review of the Irish corporation tax code
The Minister advised that there will be a review of the Irish corporation tax code in 2017 which will include consideration of how Ireland can deliver certainty for business and maintain the competiveness of Ireland’s corporation tax offering.
Knowledge Development Box (“KDB”)
The Minister announced that legislation will be introduced which will allow for small companies to avail of the KDB.
- The introduction of a reduced Capital Gains Tax rate of 10% for entrepreneurs on the disposal of a business, subject to an overall limit of €1 million in chargeable gains.
- The Foreign Earnings Deduction and Special Assignee Relief Programme have been extended until the end of 2020.
- A new share based incentive scheme for small and medium sized companies will be introduced next year.
- A review of the Irish stamp duty rate on transfers of shares in Irish companies will be undertaken in 2017.
- A cut in the rate of Universal Social Charge for low to middle earners.
- An increase in interest relief with regard to rented residential property.
- An increase in the earned income credit for self employed individuals.
- An increase in the capital acquisition tax thresholds for gifts and inheritances.
- A reduction in the rate of Deposit Interest Retention Tax of 2% each year over the next four years.
- The introduction of an income tax rebate to assist first time buyers of new homes.
Positive Outlook for Ireland
It is expected that the Irish economy will grow at a rate of 3.5% in 2017 and that the unemployment rate will continue to fall.
Budget 2017 reinforces Ireland as a favourable location for international companies to set up operations where an advantageous and transparent tax regime exists.
Disclaimer: Please note that this commentary does not purport to be a comprehensive review of the Irish Budget 2017. Detailed appropriate advice should be taken before any particular transaction is entered into.