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Ireland now "less attractive to business owners"

The protection of the corporation tax rate, however, is a positive step in keeping international businesses here.

Image: Gunnar Pippel via Shutterstock

TAX EXPERTS HAVE said that while there are some welcome measures to encourage some businesses in Budget 2013, personal taxes will make Ireland “less attractive to business owners and higher earners”.

Conor O’Brien, Tax Partner at KPMG, said:

The decision not to increase further marginal rates of income tax is to be welcomed. However the impact of increases in previous years, together with increases in other personal taxes such as CAT and CGT -both of which went up 3 per cent today, makes Ireland less attractive to business owners and higher earners.

International studies and direct evidence from those fighting for inward investment indicate that high personal taxes are second only to high corporation taxes in discouraging business and job creation. We should be more imaginative, as we have been in the past, in having limited, targeted measures focussed on the most mobile and tax sensitive businesses.

However, the conservation of the corporation tax rate at 12.5 per cent rate is being welcomed as an encouragement to keeping businesses here – and to encourage others to move here. George Osborne, Chancellor of the Exchequer in the UK, announced a cut to 21 per cent to the corporation tax rate there in his autumn statement.

“The corporation tax regime remains protected and that is crucial,” noted KPMG’s Head of Tax, Shaun Murphy. He said: “The Government has tried within the constraints upon it to limit the negative impact on business and give modest encouragement where possible.” He added:

The commitment to review the R&D regime to ensure it remains best of class is to be welcomed. Hopefully this indicates a willingness to look at core parts of the offering to FDI to ensure they remain competitive in the face of increased competition for investment and jobs from other countries.

On the Sinn Féin stated this evening that they believed domestic businesses would not thrive so well under the measures announced today. They claimed that “massive cuts to low and middle income earners will reduce demand in the domestic economy with the resultant business closures and job losses”.  They did welcome the protection of the 12.5 per cent corporation tax but claimed that “many of the large corporations pay a tax at a less rate than local SMEs”.

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