Budget 2021 was announced on 13 October 2020. This was Minister Donohoe's fourth budget speech but the first of the new coalition between Fianna Fail, Fine Gael and the Green Party. While this is the biggest budget in Irish history to date, and the usual fiscal limitations did not apply, there is little cause for celebration. The government has had to frame the budget against the backdrop of the adverse economic effects of COVID-19 and an anticipated hard Brexit. But from the ashes of the pandemic, the Minister is confident that we will build a stronger, more resilient Ireland. In the Minister's words "Budget 2021 is a bridge to that better future".
A range of multi-billion-euro measures were announced to support businesses adversely affected by COVID-19 and an anticipated hard Brexit. These include:
- the establishment of the Recovery Fund;
- extension of the Employment Wage Support Scheme (EWSS);
- introduction of a business sector targeted COVID Restrictions Support Scheme (CRSS);
- a reduction in the VAT rate applying to the hospitality sector; and
- an extension to the debt warehousing provisions and assistance for self-employed taxpayers in meeting their 2019/2020 income tax payment obligations.
On the international front, the Minister re-affirmed Ireland's commitment to the 12.5% corporate tax rate and announced that Ireland's OECD compliant Knowledge Development Box regime has been extended for a further two years. The Minister will publish an update to Ireland's Corporation Tax Roadmap that will outline more areas for reform (e.g. under ATAD ) over the coming months and years. The update will also consider the latest OECD reports on the tax challenges of digitalization. 2021 will be a key year to watch in this regard.
Full details of the budgetary measures will be set out in the Finance Bill, expected to be published on 22 October 2020.
Please click on the links below for the key measures of Budget 2021 from a tax perspective.