Changes to Corporate Tax provide clarity for FDI
Whilst addressing the needs of the ‘squeezed middle’, maintaining the top rate of tax on self-employed income at 55% and a Capital Gains Rate of 33% is disappointing, according to Deloitte
The tax measures in Budget 2015 have been broadly welcomed today by Deloitte’s head of Tax and Legal Services Pádraig Cronin. However the continued high marginal tax rates for the self-employed, and CGT levels, remain a disincentive to entrepreneurship, he said.
“The Corporation Tax changes have been done in a way that offers a clear roadmap for attracting international investment”, said Mr Cronin. “The retention of the 12.5% rate, measures to enhance Ireland’s Intellectual Property regime, enhancement of the R&D regime, the enhancement of the Special Assignee Relief Programme (SARP) and other measures announced will underpin the Government’s commitment to making Ireland a destination for the best and most successful companies in the world.
“The widely anticipated abolition of the ‘Double Irish’ structure has therefore been counterbalanced by other measures which offer investors a competitive alternative to that arrangement. It has the appropriate balance between giving certainty to Multinationals and ensuring we continue to have a ‘Best in Class’ FDI offering as we evolve our system in a changing world. The Minister is to be congratulated for having consulted widely and for giving clarity on the future,” according to Mr Cronin.
“The BEPS process and the contention over the ‘Double-Irish’ made change likely”, Mr Cronin went on. “The changes announced will address growing international concern over the tax arrangements of multinationals, while ensuring Ireland still remains a highly attractive location in a complex and changing international tax environment. In particular the SARP measures will enhance Ireland’s competitiveness in attracting mobile employees.”
Budget 2015 gave welcome focus to the indigenous sector. In particular, the measures announced for the construction / property / farming sectors and the retention of the 9% VAT rate on tourism and the hospitality sector will have a positive impact.
“As regards personal and capital tax rates, the Minister has partially responded to the needs of the ‘squeezed middle’. However, maintaining the top rate of tax on self-employed income at 55% and a Capital Gains Rate of 33% is disappointing. The Minister needs to address this tax wedge which acts as a significant disincentive for entrepreneurship,” said Mr Cronin.
For full details of Deloitte’s commentary and analysis on Budget 2015, please visit www.deloitte.com/ie/budget or follow @DeloitteIreland on twitter.
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The information contained in this press release is correct at the time of going to press.