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Deloitte’s tax specialists in Ireland have analysed Budget 2021 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 2021 articles:
- Real Estate
- Transfer Pricing
- Global Mobility, Immigration & Employment Taxes
- Ireland Inc. and Foreign Direct Investment
- Indirect Tax (VAT)
- Financial Services
- Tax and Entrepreneurship
Budget 2021 will be one of the most significant, and is the largest, in the history of the State, reflecting the funding, protection and investment priorities required for the year ahead. It reflects the overarching priority to protect lives and livelihoods. The worst economic predictions for 2020 following the onset of the pandemic have not been realized, and exchequer receipts have remained relatively resilient. The 2020 deficit will end up significantly lower than anticipated, and international sentiment towards Ireland has been positive from a lending perspective. The measures and fiscal supports which have been introduced throughout 2020 have been the right things to do, supporting lives and livelihoods, and it is welcome that this approach will continue throughout 2021 based on the budget measures announced today.
The extraordinary circumstances we face, dealing with the impact and uncertainty of COVID-19, and the threat of a no deal Brexit, have required significant levels of borrowing. This will see unprecedented levels of intervention and financial supports being provided to support the Irish economy in the year ahead, supporting impacted businesses, impacted workers, and addressing the unemployment challenge. Budget 2021 also reflects ongoing expenditure priorities across health, housing, and climate change. A focus on increased capital expenditure is welcome to assist with stimulating economic activity and jobs creation, but also with an eye on the medium term and the investment needed in key areas of housing and infrastructure to deliver longer term benefits to our economy and society.
Throughout the course of the Minister’s speech, it is clear that prudence in tax and fiscal matters will be crucial over the coming years, with a focus on reducing the national debt. However, the Government have recognized that this is not a time for austerity. Clarification that there will be no cliff edge on supports next year, together with the announcement of other targeted tax and expenditure supports and an approach of flexibility as the situation evolves, is welcomed.
The total budgetary package announced of over €17.75billion is, in the words of the Minister, “unprecedented in both size and scale”. Of note in this package is the establishment of a €3.9billion Recovery Fund to stimulate demand and employment with the Minister acknowledging the particular challenges faced by the Small and Medium Enterprise Sector due to COVID-19 restrictions. The Minister also announced a net tax package of €270million, with key changes and developments addressed and analysed by our tax specialists in detail.
Aside from the immediate concerns relating to Brexit and COVID-19, the Minister made it clear that further change is inevitable in terms of the Irish and international tax landscape. The Minster noted a future risk to the sustainability of Ireland’s corporate tax receipts, commenting that changes to tax are to be expected and decisions to be made with respect to the “future direction of the global and European corporation tax landscape”. To this end, the ongoing commitment to the 12.5% tax rate, extension to the Knowledge Development Box, and clarity on the timing of the EU ATAD interest restrictions, is welcomed. 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 2021 to be useful and look forward to bringing you further insights on the Finance Bill when it is released.