Budget 2023 was announced on 27 September 2022 (one month earlier than usual). This was Minister Donohoe’s sixth budget speech and the third of the coalition government between Fianna Fáil, Fine Gael and the Green Party. This year's budget was framed against the ongoing conflict in Ukraine, spiralling commodities and energy costs together with significant rises in the cost of living. The Minister referred to it as a "Cost of Living Budget".
The recent release of better-than-expected economic forecasts for Ireland allowed the Minister to announce a range of tax and expenditure measures worth €11bn. Budget 2023 announcements include "once off" measures of €4.1bn and other budgetary measures of €6.9bn. The Minister noted that tax receipts of €50bn at the end of August 2022 were €10bn higher than for the same period to August 2021. These "excess receipts" have allowed the government to introduce budgetary measures to ease the cost of living and provide supports to ensure that individuals, families and businesses can survive what is hoped to be a short-term crisis. In total €6bn of these "excess receipts" will be transferred to the National Reserve Fund in 2022 and 2023.
On the international tax front, after getting assurances last year concerning the proposed minimum global tax rate, Ireland signed up to the OECD Pillar One and Pillar Two commitments, supporting a minimum global tax rate of 15%. The Minister emphasised that Ireland's corporation tax regime together with the 12.5% headline tax rate, forward looking business environment and educated and dynamic workforce all perform a key role in attracting FDI.
As part of the introduction of the minimum global tax rate the government will give serious consideration to introducing a territorial corporation tax system. The Minister also announced that a review will take place of Ireland's REIT and IREF regimes to see how such regimes can support the government's housing policy. The announcement of a fundamental analysis concerning the introduction of an intermediate or third rate of income tax is welcome. This analysis is expected to be concluded by government prior to the publication of next year's Summer Economic Statement.
In our Budget 2023 briefing, we highlight details of the key budgetary measures, including Ireland’s new temporary business energy support scheme, new vacant homes tax, extensions to SARP and the knowledge development box regimes. Full details will be set out in the Finance Bill 2022, which is expected to be published in late October 2022. As usual, on tax matters, the devil will be in the detail.
Please click on the links below for the key taxation measures of Budget 2023.
For further information on Budget 2023, please contact Brian Duffy or your usual William Fry Tax contact.