Highlights

Budgetary Measures

The Minister announced a total budget package of €4.7bn. Expenditure measures will account for €4.2bn and tax relieving measures will account for the balance of €500m, including revenue raising measures of circa €230m. A separate contingency fund of €4bn is also being created to provide for the possibility of an unexpected deterioration of the pandemic situation in the coming year. 

The Corporation Tax Rate

The Minister noted the government’s recent decision to join the OECD International Tax Agreement (Agreement) on the future of corporation tax. When the Agreement takes effect, Ireland will introduce the 15% minimum effective rate for large multinational companies. Notably, the Minister confirmed that the 12.5% rate of corporation tax will continue to apply to businesses with revenues of less than €750m.   This means that 160,000 businesses employing 1.8m people in Ireland will continue to benefit from the 12.5% corporation tax rate. The Minister outlined that by joining the Agreement, Ireland will be in a position to maintain it’s tax competitiveness and to provide long-term certainty for businesses and investors.

Digital Gaming Sector Credit

The digital gaming credit was announced last year and will be introduced as part of the Finance Bill 2021.  The relief will be available at a rate of 32% on eligible expenditure subject to a limit of €25m per project.  As the credit will require EU state aid approval, it will be subject to a commencement order.

Zoned Land Tax

The Minister announced the government’s intention to introduce a Zoned Land Tax which is aimed at creating behavioural change by encouraging land to be used for the purposes of building homes. The tax will replace the vacant site levy and will apply to land which is suitable for residential development and is serviced but has not been developed for housing. No minimum site size exclusion will apply. The tax will be 3% of the market value of the land. A 2 year lead-in time is proposed for land zoned before January 2022 and a 3 year lead in time is proposed for land zoned after January 2022.

VAT

The temporary reduction in the VAT rate for the hospitality sector which is currently at 9% (down from the usual rate of 13.5%) will remain in place until the end of August 2022.  This is welcome news for the hospitality sector.

Employment Investment Incentive (EII)

The Minister announced improvements to the EII Scheme to make the scheme more attractive to investors for the benefit of start-up companies. The scheme has also been extended for a further 3 years.

Innovation Equity Fund

In Budget 2021, the Minister announced that the Ireland Strategic Investment Fund (ISIF) would establish an innovation equity fund to invest in highly-innovative, domestic enterprises.

The government intends to commit a further €30 million investment to this fund through Enterprise Ireland, which will be matched by €30 million from the European Investment Fund (subject to board approval).

Anti Tax Avoidance Directive

Ireland's transposition of the ATAD will be completed in Finance Bill 2021 (expected to be published on 21 October 2021) with the introduction of the new Interest Limitation Rule (ILR) and the new Anti-Reverse Hybrid rules.

Employment Wage Subsidy Scheme (EWSS)

It is intended for the EWSS to remain in place in modified form until the end of April 2022.

For further information on Budget 2022, please contact Brian Duffy or your usual William Fry Tax contact.