Michael Noonan, Minster for Finance is now delivering his Budget 2012 speech to Dáil Éireann.
The Minister has announced the following Tax measures:
Corporation Tax
- No change in the 12.5% Corporation Tax rate.
- A special Assignee Relief Programme to attract multinationals’ executives to Ireland
- New Foreign Earnings deductions for individuals developing markets abroad
- International financial services sector boosted by measures to be announced in Finance Bill
- First €100,000 of Research & Development expenditure to be allowed for R&D credit.
- Corporation Tax exemption for new companies extended for a further 3 years.
Farming
- Farm transfers to the next generation are to be incentivised
- Significant fall in the rate of stamp duty for farmland and other commercial property
- Retirement relief for CGT to be modified – no detail of this measure included in the Budget Speech.
- Farm partnerships to be encouraged by 50% Stock relief for participating farmers and existing 100% Stock relief for young farmers
- The 9% rate of VAT to apply to Open Farms
Air Travel Tax
- Government are ‘prepared to negotiate’ with Aer Lingus and Ryanair to incentivise tourist routes into Ireland
Construction Sector
- Stamp duty for commercial property to be cut to 2% overnight – the previous top rate was 6%
- The current rates for residential property will apply
- CGT exemption for properties bought between tonight and the end of 2013 – if they are held for 7 years.
- Commercial properties – NAMA can now approve rent reductions in certain cases, even in cases where ‘upward only rent review’ clauses apply
- Those who bought homes at the end of the property boom will gain by an increase in mortgage interest relief to 30% for those homeowners
- First time buyers will get 25% mortgage interest relief for property purchases in 2012
Property Reliefs
- Detailed policy measures to be made in Finance Bill
- s.23 Reliefs to small scale investors will not be cut
- Surcharge of 5% will apply to sheltered income where one’s income is over €100,000
Income Tax
- No increase in Income Tax bands, rates or credits.
- Universal Social Charge to be changed to help low paid seasonal & temporary workers – the exempt income level rises from €4,004 to €10,036
- the USC will be collected on a cumulative basis in 2012
Value Added Tax
- The Standard rate of VAT will rise by 2% to 23%
- The other rates of VAT remain unchanged
Capital Taxes
- Capital Acquisitions Tax & Capital Gains Tax go from 25% to 30%
- Standard Exemption for Capital Acquisitions Tax (parent-child transfers) cut from €332,084 to €250,000
Investment Income
- Deposit interest retention tax (DIRT) increased from 27% to 30%
- PRSI will cover rental and investment income from 2013
Approved Retirement (ARF) Funds
- ARF ‘imputed distribution’ charge increased to 6%
- ARF tax on death of a child over 21 goes to 21%
- Citizenship condition on domicile levy is scrapped
- Carbon Tax goes up from €15 to €20 per tonne – a 33% increase. This increase does not apply to home heating oil or solid fuel.
- Double income tax deduction for Carbon tax for farming
- VAT Refunds on farm buildings will include wind turbines
Other
- The income tax relief on pension contributions remains unchanged – tax relief will remain at the marginal rate of tax.
- A household charge of €100 per household is being introduced. Certain limited waivers will apply.
- Motor Tax increases to raise €47 million
- A new export refund scheme will apply to exports of motor cars
- The existing tax exemption for the first 26 days of disability benefit per annum is to be abolished. The Minister described this as ‘an incentive for absenteeism’
Excise Duty
- Alcohol excise duty is unchanged.
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