Business

The 12.5% Corporation Tax Rate

The government's commitment to 12.5% corporation tax rate was reaffirmed.

COVID Restrictions Support Scheme (CRSS)

This new scheme, which is in line with the government's Plan for Living with COVID-19, is aimed at businesses which have either been prohibited from operating or have only been able to trade at significantly reduced levels as a result of restrictions (generally level 3 or higher) imposed on them in response to COVID-19.

A business which qualifies for the scheme may apply for a maximum weekly cash payment of €5,000.  It is expected that the first payments should be received by mid-November next.

It is proposed to run CRSS from budget day until 31 March 2021 and it will be brought into effect by Finance Bill 2020.

Expansion of Warehousing of Tax Liabilities

The current tax debt warehousing scheme will be expanded to include repayments of Temporary Wages Subsidy Scheme (TWSS) owed by employers. 

Capital Allowances for Intangible Assets

All new intangible property acquired on and after 14 October 2020 will be fully within the balancing charge provisions on disposal. This amendment is to ensure that the Irish corporation tax regime is in line with international best practice for similar reliefs.

Knowledge Development Box

The Knowledge Development Box, which is a corporation tax relief on profits earned by an Irish company on patented inventions and copyrighted software to the extent it relates to Research and Development, has been extended by 2 years to 31 December 2022.

Employment and Investment Incentive Scheme (EIIS)

The Minister announced an assessment, to commence in Q4 of 2020, of how to enhance the EIIS in light of the current COVID-19 crisis with a particular focus on start-ups, the potential to attract capital from a broader range of investors and the possibility of including energy efficient projects within the scheme.

Film Relief

The Section 481 (Film Tax Credit) Regional Uplift scheme is being extended and will provide tapered benefit for productions in designated areas.  An additional year of uplift of 5% in 2021 was announced as the intended relief was effectively eroded by COVID-19 related production closures. The relief will thereafter reduce to 3% in 2022, 2% in 2023 and nil thereafter.  

Digital Gaming Sector 

A new credit will be developed for the digital gaming sector during 2021 to support qualifying activity from 2022.  It is thought this credit would support the current established film and animation sectors in Ireland.

Accelerated Capital Allowances for Energy Efficient Equipment

Following a review in accordance with guidelines for best practice for the evaluation of tax expenditures, this scheme is being extended by 3 years to 31 December 2023.

ATAD Implementation 

The EU Anti-Tax Avoidance Directive (ATAD) implements five separate anti-avoidance measures, in a coordinated way, throughout the EU.  As part of the ATAD transposition process, an ATAD-compliant Exit Tax regime was introduced by Finance Act 2018.  Finance Bill 2020 will include a technical amendment to the Exit Tax legislation to ensure that provisions relating to the calculation of interest on instalment payments of Exit Tax operate as intended. This clarification is being introduced by way of Financial Resolution and will be effective for amounts of tax which remain unpaid on or after 14 October 2020.

The Minister also confirmed that interest limitation and anti-reverse-hybrid rules will be introduced next year in Finance Bill 2021. 

Anti-Avoidance

The Minister introduced changes to section 541 Taxes Consolidation Act 1997 to close an anti-avoidance scheme. The change is being introduced by way of financial resolution and it will be introduced for disposals made on or after 14 October 2020.

Dividend Withholding Tax

The Minister did not make any reference to the introduction of a modified DWT regime which was proposed from 1 January 2021. Under the proposal, real-time data collected under the modernised PAYE system would be utilised to allow for a personalised DWT rate to apply to each individual taxpayer based on the actual rate of tax applicable to them.

Carbon Tax

There will be an increase in the rate of carbon tax from €26 to €33.50 per tonne in 2021 with an overall objective of increasing this to €100 per tonne by 2030. 

VAT 

The standard rate of VAT has been decreased from 23% to 21% for the period from 1 September 2020 to 28 February 2021. An additional temporary reduction to 9% from the current 13.5% for tourism and hospitality related services and goods will apply from 1 November 2020 until 31 December 2021.

Farm Consolidation (Stamp Duty Relief)

This relief, which was due to expire on the 31 December 2020, is extended by 2 years to 31 December 2023. This relief provides for a reduced stamp duty rate of 1% on qualifying transactions, reduced from the standard 7.5% on non-residential property.

Consanguinity Relief (Stamp Duty Relief)

Consanguinity relief is being extended by 3 years from 31 December 2020 to 31 December 2023. This relief provides for a reduced stamp duty rate of 1% on qualifying transactions, reduced from the standard 7.5% on non-residential property.

VAT –Flat Rate Scheme

The farmers flat rate of 5.4% has increased to 5.6% for the 2021 tax year.


For further information on Budget 2021, please contact Brian Duffy or your usual William Fry Tax contact.