Finance Act 2011
Despite protestations that it couldn’t be done, The Finance Bill passed through the Houses of the Oireachtas in less than a week following its publication and is on the way to the President for signing. The purpose of the Bill was to bring into legal effect the changes announced in the Minister’s Budget speech in December 2010. It was seen as crucial to pass the legislation to demonstrate to the EU and IMF who haveprovided us with loans that we were keeping to the agreed strategy for dealing with the countries financial woes.
There are a number of new, previously unmentioned items included in the Bill and our experts examine and comment on these in our coverage below. One item that has caused major comment is the review of the property reliefs which were effectively abolished in the Budget. A review will take place to examine the commercial impact of these proposed changes—surely something that should have been considered in advance of their abolition? With effect from Monday the 17th there is now a requirement to report certain transactions where the main motivation for these transactions is tax driven. It has been introduced to counter the practice of advisors selling tax avoidance schemes. Revenue has stated that the majority of advice given by advisors will not be reportable but it remains to be seen how this will apply in practice.
By now everyone will have opened pay packets and will understand in a real way the impact that the Budget increases have had on their personal finances. We believe that we have reached the tipping point whereby the incentive to work harder and improve your financial position is outweighed by the tax burden that arises on additional income. The failure to radically address the tax base and focus purely on income taxes will lead to a disincentive for business owners and entrepreneurs. It will also dis-encourage those who are considering investing in Ireland. Despite Corporate rates remaining at 12.5%, most FDI investments from abroad require senior personnel from the parent company to move to Ireland and penal income tax rates will hardly encourage this.
If I, or any of my colleagues can be of assistance to you or your colleagues or if you like a meeting to discuss any aspect of the recent tax changes, I would be delighted to hear from you.
Please click here to view our summary of Finance Act 2011.
Aidan Byrne
Tax Partner
