Budget 2019, announced on 9 October 2018, is aimed at delivering a balanced budget which will build strength and resilience for the future, with significant investment in housing, Brexit preparation, the health service, education, incentives for SMEs and a Rainy Day Fund to deal with larger economic shocks. Tax measures are limited. Revenue raising measures include the expected increase in the VAT rate on tourism and hospitality activities as well as increases in excise duty on tobacco, betting duty and a diesel surcharge. Tax cuts include modest reductions in Universal Social Charge (USC) and income tax, a small increase in the Group A tax free threshold for Capital Acquisitions Tax (CAT) as well as certain extensions to existing SME, film, VRT and agricultural reliefs.
Ireland's Corporation Tax Roadmap published last month sets out in detail the next steps to be taken by Ireland in implementing changes required under the EU Anti-Tax Avoidance Directives (ATAD) and the OECD's Base Erosion and Profit Shifting project (BEPS). The ATAD measures included in Budget 2019 are forecasted to be revenue neutral. As previously indicated, Controlled Foreign Company (CFC) rules will be included in Finance Bill 2018. A new ATAD compliant exit tax regime, to date expected in next year's Budget/Finance Bill, has an early introduction from 10 October 2018. However confirmation that the 12.5% rate will apply to unrealised capital gains where companies migrate/transfer assets offshore being 12.5% (rather than the 33% rate of tax on capital gains) will be welcomed. Once again the Government confirmed that the 12.5% corporation tax trading rate will not be changing and reaffirmed its commitment to a transparent, sustainable and legitimate tax regime.
Further detail on the measures announced in Budget 2019 will be contained in Finance Bill 2018, to be published on 18 October 2018. As ever, measures not announced on Budget Day may be introduced by the Government during the Finance Bill process.
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