Tax under the Fine Gael - Labour coalition
10 March 2011
As the 31st Dáil convened yesterday, and Enda Kenny became the next Taoiseach of Ireland, we have taken the opportunity to highlight, for you, some of the key the taxation policies that the programme for the coalition Government outlines.
- Commitment to retain the 12.5% corporate tax rate.
- Income tax rates, bands and credits will be maintained.
- The Universal Social Charge (USC), implemented by Finance Act 2011, will be reviewed.
- The top rate of VAT will be limited to 23% (confirming the proposed increase in the coming years).
- The 13.5% VAT rate will be cut to 12% up to the end of 2013.
- There will be no increase in the standard 10.75% rate of employer’s PRSI.
- PRSI of 8.5% to be halved up to the end of 2013 for jobs paying up to €356 per week.
- Property tax reliefs and other tax shelters will be reduced, capped or abolished for ‘very’ high income earners.
- A minimum effective tax rate of 30% will apply for ‘very’ high earners.
- Increased mortgage interest relief up to 30% for First Time Buyers in 2004-08 (from the current sliding scale of 20% to 25%) depending on the year the mortgage was taken out.
- Abolition of mortgage interest relief for new buyers from June 2011.
- Reformation of the R&D supports available to the digital game industry, including the establishment of a seed capital scheme for Irish digital gaming start-ups.
- The R&D tax credit regime will be amended, subject to a cost benefit analysis, to make it more attractive and accessible to smaller businesses.
- Tax exiles will have to make a fair contribution to the exchequer.
- The travel tax will also be reversed.
- Installation of water meters in every home in the country and the introduction of a charging system for water under a newly established water utility company.
- Options for a site valuation tax are to be 'considered'. Any such tax would take into account mortgage distress and provide local Government with a reliable stream of revenue according to the programme.
- Examination of the feasibility of introducing a Single Business Tax for micro enterprises to cut compliance costs and make starting a business easier.
As always, the devil is in the details and we will see in due course exactly how the new Government will implement and uphold these policies.
If I, or any of my tax team, can be of any assistance to you or your colleagues, or if you would like a meeting to discuss any aspect of your tax affairs, we would be delighted to hear from you (01 496 5388 or tax@bakertillyrg.ie).
Kind regards,
Aidan Byrne
Tax Partner
