DUBLIN: The Government is likely reduce the VAT rate on new homes in the forthcoming budget to encourage more developers into the market, according to consultancy firm Deloitte.
In a new report, the company also said it does not expect to see any significant changes in Budget 2017 in the area of foreign direct investment (FDI) but urged the coalition to consider introducing more measures to boost competitiveness.
Deloitte said the cabinet is likely to begin consultations shortly on a range of tax measures that are needed in response to moves by the international community to combat aggressive tax planning by multinationals. These include measures such as the EU’s new anti-tax avoidance directive and the OECD’s base erosion and profit shifting (BEPs) project.
The consultancy is recommending a full strategic review of Ireland’s corporate tax regime to ensure the country is positioned to retain and attract investment.
“Ireland should be open to taking bolder moves, particularly given the potential corporate tax strategy that the UK may pursue in a world post-Brexit,” said Deloitte’s head of tax Lorraine Griffin.
Deloitte predicted the Government would slash the VAT rate on new homes to 9 per cent from 13.5 per cent to boost housing supply. It said a number of supports to aid first-time buyers and landlords are also on the cards.
The company said while there may be minor adjustments to the CGT entrepreneur relief, it does not expect there will be enough done to bring it into line with the equivalent UK offering. However, it also predicts positive changes to share-based remuneration with the possible introduction of a scheme similar to Britain’s Enterprise Management Incentives programme for smaller and privately listed firms.
In terms of individual taxation, Deloitte said it expect modest changes to be made in terms of the self-employed, while the high marginal rate of tax for those earning over €100,000 will continue. It also expects Capital Acquisitions Tax thresholds to be increased, although not to the pre-April 2009 levels.
