On 10 May 2011, the Minister for Finance, Michael Noonan announced the Government’s Jobs Initiative which contains measures to promote employment within certain sectors of the domestic economy. The Minister also took the opportunity to reiterate in his speech, the Government’s commitment to the 12.5% corporation tax rate and that the 12.5% corporation tax rate is integral to Ireland’s long term tax strategy. Set out below are the main highlights announced in the Jobs Initiative which has been put into effect in the Finance (No.2) Bill 2011.

• Abolishment of Employer’s PRSI on share based remuneration effective from 1 January 2011
• The lower 8.5% Employer’s PRSI rate is to be halved to 4.25% for employees that earn up to €356 per week. This will take effect from 1 July 2011 and will apply until 31 December 2013
• The existing Employer Job (PRSI) Incentive Scheme, which provides for an exemption from employer PRSI where a person who has been unemployed for at least 6 months is taken on in a new full-time position, will remain until 31 December 2011
• Enhancement of the Research and Development tax credit regime by allowing companies the option to account for the credit above or below the line. The Finance (No.2) Bill also amended the amount of R&D tax credits which can be refunded to a company to two years’ payroll liabilities instead of one year
• The tourism sector also received a boost and a stimulus for employment with a reduction of the 13.5% VAT rate to 9% in respect of services relating to tourism. The new rate will take effect from 1 July 2011 until 31 December 2013. The Air Travel Tax is also to be reduced to zero subject to a Ministerial Order and commitment by the Airlines on reaching certain increased passenger numbers
• A capital work scheme was introduced in respect of schools, roads and retrofitting homes for energy efficiency
• Introduction of a temporary pension levy of 0.6% on the capital value of assets under management in pension funds established in Ireland in order to fund the Jobs Initiative. This temporary measure is to apply for a period of 4 years from 2011 to 2014

Contributed by Conor Bradbury, Sonya Manzor.

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