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11 May  2011

Yesterday afternoon the Government outlined details of their jobs initiative program, the main points of which are as follows:

• Minister for Finance Michael Noonan highlighted the integral role of Ireland’s corporation tax regime in attracting Foreign Direct Investment and creating and sustaining employment. He emphasised that the Government is committed to our corporation tax regime and stated our 12.5% rate is here to stay.
• The current Research and Development Scheme is to be amended to enhance the flexibility of businesses accounting for the R&D tax credit. The legislation is to be amended to allow the credit be accounted for above or below the line.
• The employer PRSI charge has been abolished on share based remuneration with effect from 1 January 2011.
• The lower rate of VAT is to be reduced from 13.5% to 9% from 1 July 2011 to 31 December 2013. This reduction is targeted on goods and services relating to the tourism industry including:
  - Restaurants
  - Catering trades-
  - Hotels and holiday accommodation
  - Entertainment services eg: admission to cinema's, museum etc.
  - Printed matter including newspapers, maps,brochures etc.

• The lower rate of PRSI is to be halved from 1 July 2011 on workers earning less than €365 per week.
• The minimum wage will be restored to its previous level from 1 July 2011.
• 20,900 training and internship places are to be made available through an Employment Action Plan to engage with those on the live register.
• Capital expenditure is to focus on minor capital works including improving roads and schools in order to create local employment.
• The air travel tax is to be reduced to zero, subject to agreements with airlines to bring more passengers to Ireland.
• The measures contained in the initiative are to be funded by 0.6% levy on pension schemes for the next 4 year, with the aim of raising €470m each year.

Should you require any assistance or advice on how these measures affect your situation, please do not hesitate to contact a member of our tax team at 01 496 5388 or e-mail tax@bakertillyrg.ie