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Deloitte’s tax specialists in Ireland have analysed Budget 2022 and are pleased to provide you with our perspectives on what it means for you and your business in the future.
We invite you to view our articles below and some analytics about the Government’s financial position, and also to try our Tax Calculator to work out what personal tax implications this year’s Budget will have for you and your family. Feel free to follow our Budget commentary on Twitter at @deloitteIreland.
Budget 2022 articles:
- Real Estate
- Transfer Pricing
- Global Mobility, Immigration & Employment Taxes
- Ireland Inc. and Foreign Direct Investment
- Indirect Tax (VAT)
- Financial Services
- Tax and Entrepreneurship
In Budget 2021, we saw unprecedented levels of intervention and financial supports being provided to support the Irish economy against a challenging backdrop created by COVID-19 and the expectation of a no deal Brexit. The backdrop for Budget 2022, by contrast, is a testament to the changing economic landscape we find ourselves in as we move towards a post-COVID world.
Budget 2022 is set against an economic backdrop where we have seen strong GDP growth quarter on quarter in 2021 and an improvement in public finances driven by recovery in taxation receipts.
With more positive economic indicators than in prior years, Budget 2022 now looks to the post COVID-19 era and to building recovery and confidence across all sectors of the economy. The focus is now on building sustainable growth for the future both in terms of inward investment and domestic business. This is combined with a focus on supporting vulnerable businesses and addressing the cost of living pressures (protecting the most vulnerable), as society and the economy reopens further. The announcement by the Minister of the extension of the Help to Buy scheme is welcome given the current housing crisis. The amendments to the income tax regime to index rate bands and credits to inflation recognises the rising cost of living in recent times.
In line with the Summer Economic Statement, the Minister outlined a core budgetary package for Budget 2022 of €4.7billion. Of this, €500m is allocated for “tax measures”. Key changes and developments on the tax measures announced have been addressed and analysed by our tax specialists in detail.
Throughout his address, the Minister made it clear that the response to COVID-19 from the Government was unparalleled, but also justified. In particular, the announcement from the Minister of the extension to 30 April 2022 of the Employment Wage Subsidy Scheme (EWSS) and the tapering of payment levels is particularly welcome for businesses getting back to full capacity post pandemic. The importance of the wage subsidy schemes in supporting employment throughout the pandemic was alluded to by the Minister and was given credit for the now strong VAT and Income tax receipts to date.
The ever-present challenges in respect of climate change and sustainability were given considerable attention, as noted by the Minister “Future generations will not tolerate inaction from the leaders of today”. Changes on foot of such a comment include amendments to the VRT system, and amendments to tax relief on certain energy efficient equipment are reflective of the considerable attention given to climate change and sustainability, and a core theme we will likely continue to see for many years to come.
Budget 2022 and the upcoming Finance Bill 2021 include a number of well flagged changes to Irish tax law, including the imminent introduction of interest limitation rules required by the EU Anti-Tax Avoidance Directive. The recent announcement from the Minister that Ireland is to agree to the OECD international tax reform proposals on Pillars One and Two will alter the way in which multinationals (including Irish PLCs) tax their profits globally; a key focus in 2022 and onwards will therefore be on the design of such rules. Notwithstanding such changes, Ireland remains in a strong position both to attract inward investment and encourage domestic business; the retention and commitment of the Minister to the 12.5% rate of corporation tax for businesses with turnover of less than €750million is welcome in this regard. A number of measures to support business in the future including the extensions to start up relief, the digital gaming credit and the Employment Investment Incentive scheme are welcome, but there may be a mixed reaction with respect to measures such as the Zoned Land Tax.
Continued consultation, dialogue and innovation with respect to the overall tax framework in Ireland will be critical in the years ahead, both for the multinational and domestic sectors.
We hope you will find Deloitte’s commentary on Budget 2022 to be useful and look forward to bringing your further insights on the Finance Bill 2021 when it is released.