The Minister for Finance introduced the 2020 Budget on 8 October 2019. Further detailed measures will be included in the Finance Bill to be published on 17 October 2019.
Budget 2020 was introduced by the Minister for Finance against the backdrop of great economic uncertainty. While Ireland has enjoyed enormous economic success in recent years with our fiscal accounts expected to move into surplus this year, the economy is poised at a point between the twin risks of overheating and Brexit (and a global economy slowing down). This uncertainty is further compounded by discussions at an OECD and EU level on BEPS 2.0 which is exploring how and if countries should allocate taxing rights on cross border revenues and whether corporate profits should be subject to a minimum rate of tax.
The Budget has therefore been shaped on the basis of a No Deal Brexit which sees a prudent approach to the use of the fiscal space. The minister announced that there would be no personal tax cuts given the economic uncertainty and outlined a mixture of tax increases and modest tax reductions.
The commitment to the 12.5% corporation tax rate was welcomed. It was also encouraging to see the minister take further steps to support a more environmentally friendly and sustainable economy.
There will be some disappointment that this Budget does not include measures to improve the competitiveness of Ireland’s tax regime for international mobile talent or domestic entrepreneurs. The foreign multinational sector accounts for 77% of corporation tax receipts and 43% of income tax, USC and PRSI receipts. Ensuring that Ireland can attract very senior executives to support the growth of these organisations is therefore key to supporting and growing this tax base. While it is positive that the minister will look at Entrepreneur’s Relief, it is disappointing that this Budget saw no changes to it.
Such changes would complement our competitive corporation tax offering and encourage Irish businesses with Irish based owners.