Again, this year the Minister reaffirmed Ireland’s commitment to retaining the 12.5 percent corporation tax rate. The corporate tax measures announced as part of Budget 2021 are aimed at the digital, innovative and film industries - perhaps cleverly investing in future growth sectors to support the rebound of the economy. Highlights announced include the creation of a digital gaming tax credit, a change to the intangible asset regime along with extensions to several reliefs which were due to expire. Furthermore, the Minister will publish an update on Ireland’s Corporation Tax Roadmap and its response to the OECD’s latest international tax proposals.

OECD update

In his speech, the Minister for Finance touched on the ongoing OECD international tax reform. He will publish an update on Ireland’s Corporation Tax Roadmap in due course. This will consider the latest reports published by the OECD BEPS Inclusive Framework on its work to address the tax challenges of digitalisation. Further work is needed at international level before final agreements can be reached and therefore Ireland’s corporate tax take should not be affected in 2021. However, change is inevitable sometime in the future.

The Minister outlined that agreement at OECD level would present challenges for Ireland as changes to the international tax framework would see a reduction in the level of profits taxable here. Failure to reach agreement at OECD level would also have negative consequences for Ireland. The future direction of the global and European corporation tax landscape will be decided upon next year.