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Corporate Tax Changes In Ireland

Friday 31st October 2014

The Minister for Finance in Ireland delivered his 2015 Budget speech on 14 October 2014 in which he announced a corporate tax Road Map to include a number of tax changes.

The Road Map will:

(a) improve Ireland’s R&D regime by fully phasing out the R&D base year from the 1st of January 2015;

(b) enhance Ireland’s existing intangible asset tax provisions for companies to develop intellectual property;

(c ) improve SARP, the special assignee relief programme;

(d) increase the resources of the Revenue Commissioners in its role as ‘competent authority;

(e) provide an extension to the three year corporation tax relief for start-up companies, and

(f) extend the accelerated capital allowances scheme for energy efficient equipment for a further three years.

The Minister also announced the introduction of a ‘Knowledge Development Box’ along the lines of patent and innovation boxes which have been introduced in other countries.  A public consultation process will gather views on how the Knowledge Development Box should operate and legislation is planned for the 2015 Finance Bill or as soon as EU and OECD discussions conclude.

The Minister also referred to aggressive tax planning by multi-national companies, in particular schemes that exploit mismatches in tax legislation which are being heavily scrutinised by the OECD and others through the BEPS project. He referred to the so called “Double Irish” scheme and confirmed that he will be abolishing the ability of companies to use such a scheme by changing the residency rules which will require all companies registered in Ireland to also be tax resident. This change will take effect from the 1st of January 2015 for new companies, whilst for existing companies, there will be provision for a transition period until the end of 2020.

He confirmed that the current corporate tax rate of 12.5% will remain part of settled policy and will not change.

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