On 16 September 2021, the Finance Department and the Department of Employment Affairs and Social Protection published Tax Strategy Group papers prior to Budget 2022. Some of the changes in the Budget papers are given below:
Corporate tax
As Government previously made a commitment of 12.5% corporate tax rate, so the part, TSG 21 – 05 Corporation Tax paper proposed to 12.5% corporate rate, which applies to a broad base, is internationally competitive and is notable for its long term stability. Certainty, transparency and a commitment to open engagement with stakeholders are cornerstones of the CT regime. This also proposed to extend the start-up company relief that was due to expire at the end of 2021. An update regarding the implementation of legislation on interest limitation and anti-hybrid rules was proposed in the paper. Again, a tax credit for the digital gaming sector was proposed to establish.
International tax
Among all the papers, TSG21-06 International and EU Tax Developments discusses both tax developments at both an EU and International level, including Ireland’s position on recent developments. The OECD published Blueprints in October 2020 detailing a two pillar proposal. This part restates Ireland’s position on the OECD Pillar 1 and 2 proposals. It also provides for an update on the status of a number of EU tax developments. Pillar 1 is examining a re-allocation of a proportion of profits to market jurisdictions, while Pillar 2 seeks to apply a global minimum effective tax rate. Ireland has been supportive of a Pillar 1 solution but has reservations on Pillar 2. Ireland has expressed broad support for the agreement, but has a reservation, particularly about the proposal for a global minimum effective tax rate of at least 15%.