Ireland: Tax measures in economic recovery plan (COVID-19)

Support that will be available through the planned re-opening of the economy

Support that will be available through the planned re-opening of the economy

An economic recovery plan introduced by the Irish government includes a number of tax and non-tax measures focused on the continued recovery of the economy from economic effects of the coronavirus (COVID-19) pandemic.

The plan seeks to build on existing COVID-19 support programs and to provide some certainty for businesses regarding the support that will be available through the planned re-opening of the economy.

Business tax

  • The COVID-19 restrictions support scheme (CRSS) was introduced by the Finance Act 2020 as a targeted support for businesses that had to close temporarily due to public health guidelines. A re-opening will result in claimants exiting this relief scheme. However, the program will be extended until the end of the year. Additionally, there will be an enhanced re-start payment for businesses exiting the scheme, equal to three weeks at double rate of payment, subject to certain limits.
  • A new business resumption support scheme (BRSS) will be introduced in September 2021 for businesses with turnover reduced by 75% compared to 2019 as a result of public health restrictions. The scheme will not be restricted by location, rate paying or physical premises. Qualifying businesses will be able to apply to Irish Revenue for a cash payment. This scheme acknowledges the fact that not all businesses will return to full trading activity immediately.
  • The tax debt warehousing scheme will be extended through the end of 2021. In practical terms, this means that businesses will not have to pay warehoused tax liabilities until 1 January 2023, with interest at a rate of 3% applying for a certain period thereafter. Management of cash flow is a key consideration for businesses in the early months of resumed trading activity.
  • The announced extension of the lower value added tax (VAT) rate of 9% until September 2022 and extension of the commercial rates waiver until the end of September 2021 will affect businesses operating in sectors such as tourism, hospitality, entertainment, and certain personal services such as hairdressing.

Employment tax

The pandemic unemployment payment will be gradually phased out with no new claimants permitted from 1 July 2021; however, it is possible for individuals to claim jobseeker benefits instead.

The employment wage subsidy scheme (EWSS) is extended through 31 December 2021, with the government indicating that the current enhanced payment rates are to be retained for the third quarter, but rates could be reviewed in September. The time period for assessment for EWSS also is extended from the current six months to 12 months, with the aim of benefiting more businesses.

The plan also signals a potential future increase to pay-related social insurance (PRSI) rates across all classes, with no specific details included.

International tax

The economic recovery plan commits to enhancing Ireland’s value proposition for foreign direct investment through an ongoing focus on competitiveness, further developing our innovation eco-system and improving high-level skills availability. The plan re-confirms Ireland’s commitment to working toward an agreement at OECD level that would accommodate Ireland’s 12.5% corporation tax rate, among other items.
 

Read a June 2021 report prepared by the KPMG member firm in Ireland

 

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