Welcome to the William Fry Tax Advisors 2011 Budget Briefing. In December 2009 we said that the 2010 Budget was the toughest that any Minister had to lay before the House but we were wrong!
This Budget strikes deep into the core of Irish society. No room for manoeuvre, this is radical surgery. This will test the resolve of every citizen. No doubt, from a bookkeeping exercise the IMF and the Eurocrats will be content. The greatest challenge for the next Government will be to bring stability to Ireland, to demonstrate to our international investors that there is a clear plan and that there will be no surprises.
From an international perspective, the following is the initial reaction from our Taxand colleagues:
“The key message for multinationals is that the 12.5% rate has been maintained for corporate tax. Ireland was right to resist pressure from certain European partners to increase this. A sudden shift to a high corporate tax rate could have been catastrophic for the Irish economy. The shift in tax burden seems to have been heavily loaded toward individuals, with VAT and personal income tax being increased rather than business taxes. Provided that the erosion in after tax income for individuals doesn’t lead to an increase in wage bills over time, the Budget should be well received by the multinational sector. After these fairly radical changes, it will be important to maintain the current tax system and limit future amendments. Multinationals appreciate stability as they plan over long cycles and Ireland now needs to keep a steady hand on the tiller.” Keith O’Donnell Taxand Luxembourg
“US multinationals will be relieved to see Ireland secure its low corporate rate and incentives for a highly-trained workforce. The recent uncertainty around the longevity of the rate and instability of the currency markets have impeded increased investment. As other countries are lowering their corporate rates, especially those organized around US investments into Asia, and as the US considers corporate tax incentives to reduce its own unemployment rate, Ireland remains competitive with these tax advantages intact.” Albert Ligouri Taxand USA
Martin Phelan, Head of William Fry Tax Advisors
Further detail on the main features of the 2011 Budget is highlighted in our Briefing, which I hope you will find useful. If you have any comments or queries, please contact us.
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