Ireland Unveils New Tax Incentives

By Editorial 17 February, 2012

Tax reform features heavily in Ireland's new Action Plan for Jobs, a package designed to boost job creation and establish Ireland as the best small country in which to do business.

Finance Minister Michael Noonan welcomed the Plan's launch, stating that the government's approach is to use the limited available resources to develop specific targeted measures. The Plan follows on from Noonan's latest Finance Bill, unveiled last week, which will put many of his Department’s actions under the Plan into effect.

Reforms include the introduction of a Special Assignee Relief Programme, which aims at reducing the cost to employers of assigning skilled individuals from abroad to take up positions in the Irish-based operations of their employer by offering exemptions from income tax. Also new is a Foreign Earnings Deduction, which will assist companies seeking to expand into emerging markets in Brazil, Russia, India, China and South Africa.

In addition, the corporation tax exemption for start-ups will be extended to 2014. Also included are a range of measures to support the International Financial Services Sector and the further improvement of the research and development (R&D) tax credit system to make it easier for small companies to invest in R&D. Lastly, the government will improve the tax system for businesses through efficiencies in administration and the extension of double taxation agreements.

According to Noonan: "These new taxation measures will assist both domestic and foreign companies to grow and create jobs. The approach adopted in the Budget and in the Finance Bill is to use the limited available resources to develop specific targeted measures. These measures are focused on areas which have the best employment potential and returns for the investment of public money."

Noonan added that the Action Plan will be supported by the government’s overall taxation policy as set out in his December Budget, which did not increase income taxes. At the time, he also reaffirmed the government's commitment to the 12.5% corporation tax rate and the value-added tax (VAT) reduction for the tourism sector introduced early last year.

The Action Plan also sets out an important role for the Finance Department in the restructuring of the Banking sector. Noonan said: "Our actions are ensuring that it is focused on providing credit to sustainable businesses. The pillar banks have made commitments to lend to the SME sector have been set ambitious lending targets by the government of EUR3.5bn (USD4.5bn) in 2012 and EUR4bn in 2013. Both banks were required to sanction lending of at least EUR3bn in 2011 and have indicated that they have achieved this target. The Action Plan includes measures to ensure that the Enterprise Development Agencies and the Banks are working together to make it easier for businesses to access credit and to receive advice and assistance from the banks.”

Noonan concluded: “The government’s primary objective is to support the creation of jobs. The Action Plan for Jobs...provides a series of actions that will assist in meeting this objective. Departments’ and Agencies’ implementation of each action will be continually monitored and this is essential to ensure this country meets the [Prime Minister]’s objective of becoming the best small country in the world in which to do business.

Tags: Individuals | Expatriates | Tax | Investment | Business | Double Tax Agreement (DTA) | Value Added Tax (VAT) | Ireland | Banking | International Financial Centres (IFC) | Budget | Corporation Tax | Group Taxation | Offshore | Agreements | Offshore Banking | Research And Development |


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