Budget 2021 has been broadly welcomed
Budget 2021 coverage proudly brought to you in association with EY
In response to the announcement of Budget 2021 earlier this week Leanne Storan, Tax Director at EY Limerick has been giving her analysis.
"Traditionally budgets have been characterised by reliance on the so called ‘old reliables’ to raise taxes, but Budget 2021 could be seen as ushering in the era of the ‘new reliables"
- Reliance on the domestic economy for future recovery and on helping businesses retain jobs and survive the impact of Brexit and Covid-19.
- Reliance on new sectors to deliver growth as demonstrated by the support for the digital gaming sector and the creation of a state-backed equity fund to invest in domestic, high innovation enterprises.
- Reliance on generating tax revenue in the future in ways that support sustainable development and the state’s commitment to achieving carbon neutrality.
- Reliance on “saving jobs and protecting our health,” as the priorities to ensure a swift and stable economic recovery.
“This was a budget delivered by a finance minister who is also the President of the Eurogroup."
- There was clear acknowledgement of the scale of borrowing required to fund this unprecedented quantum of public spending and the need to ensure a prudent approach which is comparable to other EU member states.
- There was reference to the joint effort required by member states and institutions such as the ECB to ensure an all-EU approach to dealing with the economic fallout from the pandemic.
- Noting of ongoing processes including OECD negotiations on significant proposed international tax policy changes and their possible impact on Ireland.
“The budget was pitched to focus on the immediate challenges, but the Minister clearly had an eye towards the future economy and the critical role that innovation has to play in that.
“It is good news that the knowledge development box that supports R&D has been extended by two years to December 31, 2022. The proposal to look at a new tax credit for the digital gaming sector from 2022 is also very welcome. In addition, the mandate announced by the Minister to form a group geared towards leveraging European capital with a view to establishing an equity fund to invest in domestic, high innovation enterprises builds on Ireland’s exiting suite of innovation incentives. All this underlines the importance of innovation in Ireland’s future competitiveness."
"Given the increasingly important role of the knowledge economy and the need for Ireland to continue to remain internationally competitive, we would have liked to have seen a 4-year extension to the knowledge development box. This would provide even greater certainty to business and encourage more taxpayers to avail of this regime. We will continue to engage with Government to seek the improvements we feel are still needed here.