On 13 October 2020, the Finance Minister, Paschal Donohoe, presented the 2021 Budget Statement. The Budget basically underpins the Government’s support for the economy in the face of Covid-19 pandemic. Some of the tax measures included in the Budget are given below:

Corporate income tax

As part of their commitment to international tax reform, they have been transposing the EU Anti-Tax Avoidance Directive, or “ATAD”, since Budget 2019 and will continue to do so next year with the introduction of interest limitation and antireverse-hybrid rules. The Finance Minister will be making a technical amendment this year to the ATAD-compliant Exit Tax rules to clarify the operation of interest on instalment payments.

Capital gains tax

The Budget proposed to amend the ordinary share holding requirement so that an individual who has owned at least 5% of the shares for a continuous period of any 3 years qualifies for this relief. Previously, a person had to own at least 5% for a continuous period of 3 years in the 5 years immediately prior to the disposal.

Personal income tax

According to the Budget, the Knowledge Development Box relief is extended for a further two years until 31 December 2022. Again, the tax debt warehousing scheme to include repayments of Temporary Wage Subsidy Scheme owed by employers and preliminary tax obligations for adversely affected self-assessed taxpayers is expanded.

VAT

As part of the July Stimulus, the Finance Minister declared a reduction in the standard rate of VAT from 23% to 21% for the period 1 September 2020 to 28 February 2021 proving assistance to a wide range of economic activities and, as such, benefits a broad range of businesses and traders. Also, a reduced VAT rate from 13.5% to 9% was announced for the hospitality and tourism sector with effect from 1 November 2020.