Finance Act 2012: Moving in the right direction
by Padraig Cronin, Head of Tax & Legal Services
The Finance Act to give effect to the measures announced in the Budget on 6 December, 2011 was enacted on 31 March, 2012. This confirms that there are no changes to Income Tax rates or credits for 2012, the increase in the capital acquisitions tax and capital gains tax rates to 30% and the increase in the VAT rate to 23%.
The Finance Act continues the process of balancing incentivisation and revenue raising measures.
Details have been given on the new tax exemption designed to encourage foreign employers to locate business people in Ireland to grow Irish-based operations. Employees who are located in Ireland for more than 12 months will be able to claim an exemption on 30% of their income between €75,000 and €500,000.
A second innovation is the ability for key employees involved in R&D activities to benefit by a reduction in their income tax liability from the employer’s R&D credit subject to the individual paying tax at an overall rate of at least 23% on their total income.
In the continued drive for better efiling of information, the Act gives Revenue powers to require businesses to file not just their tax returns but their accounts and tax computations using ROS in iXBRL format. The Revenue propose that this will affect the larger taxpayers from September, 2013 and be extended to all taxpayers on a phased basis. Taxpayers need to prepare in advance for this.
The Government continues in its endeavours to encourage job creation at a time of limited resources. It is to be hoped that our improved competitiveness, the availability of skilled labour and the measures introduced today are recognized by the business community at home and particularly abroad.
I hope you find our commentary and analysis helpful to you and your business.
Head of Tax & Legal Services