Chartered Accountants Ireland notes targeted actions to support business and the domestic economy, such as changes to Revised Entrepreneurs Relief, the extension of the Special Assignee Relief Programme, and an increased rate of R&D tax credit, noting the role these can play in enabling Ireland to remain competitive in attracting quality employment and investment.
Cróna Clohisey, Director of Members & Advocacy, said:
“Global economic uncertainty presented government with a trade off in Budget 2026, and it is clear today that VAT measures have trumped personal taxes in the need to protect employment.
“For the first time in five years, income tax credits and bands have not been adjusted for inflation—meaning many workers will face an unexpected tax hike in 2026. Wage growth will push more earners into the 40% tax bracket, while rising PRSI contributions further erode disposable income. This squeeze on take-home pay, despite no change in tax rates, will inevitably impact consumer spending.”
Missed opportunity to reduce the burden of compliance for business
On Enhanced Reporting Requirements, Cróna Clohisey said:
“It is really disappointing that no changes to Enhanced Reporting Requirements were announced today. The onerous real-time reporting of tax-free small benefits and expenses is a compliance burden on businesses and not addressing this today was a missed opportunity.”
Balancing the cost of doing business
Chartered Accountants Ireland advocates on behalf of almost 40,000 members, with Institute research showing that 77% of SME members reported increased business costs in the past six months, the largest being labour costs. While the VAT reduction for food, catering and hairdressing services will be helpful in managing costs for some businesses, it will not address the cost pressures facing SMEs across other sectors of the economy.
Cróna Clohisey said:
“While the reduction in VAT for certain hospitality services may offer some relief to businesses in that sector, it does not address mounting cost pressures across the wider economy. For example, businesses have already been impacted by the increase in Employers’ PRSI from 1 October 2025 with further increases expected each year up to 2028 – a direct increase in the cost of labour. A more sustainable approach to easing these cost burdens is needed.”
Supports for business
At a time when countries globally are sharpening their industrial tools amid greater competition for investment, today’s changes to the R&D tax credit demonstrate the government’s commitment to research and innovation.
Gearóid O’Sullivan, Head of Tax, Chartered Accountants Ireland said:
“R&D is an extremely valuable tool to boost economic resilience and drive growth and job creation in the economy, and today’s increase in the R&D tax credit rate to 35% is very welcome. We look forward to further detail in the coming weeks on the government’s research & development compass which we hope will lead to meaningful changes to the relief to address divergence with industry practices.
“In terms of broader innovation and enterprise supports, we know that barriers to access and administration can disincentivise businesses from claiming, particularly for time and resource-constrained SMEs. Such barriers should be reduced in favour of efficiency wherever possible.”
Addressing the infrastructure deficit
Chartered Accountants Ireland has engaged extensively in recent years on methods to address significant deficits in the State’s crucial infrastructure, which represent a threat to ongoing economic growth and investment.
Commenting on the tax measures for new build apartments, Cróna Clohisey said:
“The VAT cut on new apartment sales coupled with the targeted corporate tax deduction for certain construction costs on the building of new apartments should help address supply challenges given it will be implemented in a time limited and targeted way. Viability of certain construction projects has been cast into sharp focus in recent months, with CSO data showing a drop of 24% in apartment completions from 2023 to 2024. Today’s measures will hopefully jumpstart construction on many sites that already have planning permission.”
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