Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

The roadmap responds to a changing international environment and ensures that we continue to attract and retain companies of real substance offering real jobs. The roadmap will improve Ireland’s research and development, R&D, regime by fully phasing out the R&D base year from 1 January 2015; enhance Ireland’s existing intangible asset tax provisions to make Ireland an even more attractive location for companies to develop intellectual property; improve SARP, the special assignee relief programme; and increase the resources of the Revenue Commissioners in its role as competent authority.

I am also going to extend the three-year corporation tax relief for start-up companies and the accelerated capital allowances scheme for energy-efficient equipment for a further three years.

Companies now invest as much or more in knowledge-based capital as they do in physical capital such as plant and machinery. Consequently, I intend putting in place a "knowledge development box" along the lines of patent and innovation boxes which have existed for many years in countries that compete with us for foreign direct investment.

I am launching a public consultation process to gather views on how the knowledge development box should operate and plan to legislate for it in next year's finance Bill or as soon as EU and OECD discussions conclude. My intention is that the knowledge development box will be best in class and at a low competitive and sustainable tax rate. This intellectual property offering will be a key element in attracting future foreign direct investment to Ireland.

Aggressive tax planning by multinational companies has been criticised by governments across the globe anddamaged the reputation of many countries. Schemes that exploit mismatches in tax legislation are being heavily scrutinised by the OECD and others and will come to an end over time through the base erosion and profit shifting project. The so-called "double Irish" is one of many such schemes. I am abolishing the ability of companies to use the "double Irish" by changing our residency rules to require all companies registered in Ireland to also be tax resident in Ireland. This legal change will take effect from 1 January 2015 for new companies and there will be provision for a transition period for existing companies until the end of 2020. This proactive change will not bring an end to international tax planning, which requires co-ordinated action by all countries. By taking action now and making this change as part of a broader reform of our corporate tax system, we are giving certainty to investors about corporate tax in Ireland for the next decade. These measures will enhance Ireland's corporate tax regime and align it with best practice internationally. It will ensure that Ireland continues to be the home of the best and most successful companies in the world. We will attract and retain companies with real substance offering real jobs. Full details of all the measures I am announcing today will be included in the finance Bill.

IFSC

Corporation tax reforms will also support our international financial services sector in which more than 33,000 highly skilled professionals are employed. A new strategy for financial services in Ireland is being developed and will be launched next year. The strategy will identify and lay out actions to successfully develop the opportunities to grow the sector in this globally competitive market and increase the numbers employed.

Farming and agrifood sector

I now move to farming and the agrifood sector. Farming is our largest indigenous industry with an annual turnover of approximately €26 billion and 170,000 employees. It is important not only because of the number of people it employs but also because it employs those people in every townland and along every byroad in Ireland. I am publishing today the agritaxation review, which I announced in last year's budget. Arising from the recommendations in the review, I am introducing a number of tax measures to support farming.

There will be no milk quotas from 2015 leading to new opportunities which we can exploit but we must make additional land available to young and active farmers. Therefore, to encourage the long term leasing of land and improve productivity, I am increasing the income tax exempt thresholds by 50% and introducing a new threshold for leases of 15 years and over. I am allowing relief where the lessee is a company and removing the current 40-years-of-age threshold for leasing relief. I am targeting CAT relief for agricultural property to ensure it is used by active farmers and broadening CGT retirement relief so that, for example, individuals can now lease out their land for up to 25 years prior to disposal and still be eligible for CGT retirement relief. I am extending CGT retirement relief to land let under conacre which is disposed of or converted to long term leasing before the end of 2016, extending stamp duty relief for non-residential land transfers between certain close relatives, and removing stamp duty on agricultural leases in excess of five years. I am extending CGT farm restructuring relief to the end of 2016 and broadening it to allow for restructuring through whole farm replacement.

Volatile agricultural prices make it difficult for farming families to earn a steady income over a number of years. To improve the situation, I am increasing the range for income averaging from three to five years. I am also allowing income averaging on farm income to be available to farmers who derive income from another trade or profession, if this is due to on-farm diversification. This measure will be reviewed after three years to assess how well it is working.

The farmers’ flat rate addition for farmers not registered for VAT is being increased from 5% to 5.2% with effect from 1 January 2015.

In recognition of the importance of the Irish bloodstock industry to the rural economy and the anticipated yield of €25 million per annum from betting duty, the Government will be providing an additional €6 million a year for three years to the fund for horse and greyhound racing. The Government is also allocating additional capital of €5 million to Horse Racing Ireland in 2015 to leverage investment in race courses.

Microbreweries in Ireland have been a success story in recent years. They have expanded their market share, provided employment throughout the country, and are now making inroads into markets abroad. To further assist the development of this sector and not to stand in the way of growth, I am increasing the annual excise relief production ceiling for microbreweries from 20,000 to 30,000 hectolitres.

Marine

Having experienced the positive outcome of the agri-taxation review, I am now proposing a similar exercise for the marine sector. The Government has prioritised the marine as a key area for further growth under the harnessing our ocean wealth strategy, with a target of doubling the value of Ireland’s blue economy by 2030. I am keen to ensure there is a supportive financial environment underpinning this target and so I intend to review the financial and taxation supports and opportunities available to the marine sector. This exercise will not cover offshore petroleum exploration and production as a revised taxation regime for this area has already been determined. My Department will work closely with the marine co-ordination group to examine strategic measures that could be introduced to help Ireland as an island nation to fulfil its potential in the marine area.

Film

The new Irish film tax credit scheme is due to commence in 2015 and I am pleased that it has been broadly welcomed by the film industry. The film industry is very important to modern Irish culture and to the economy, not just in terms of jobs but also indirectly through tourism promotion. As the new scheme beds down next year, I will be monitoring how it works and how it can be improved. One of the issues that I will consider in the context of budget 2016 is a possible increase to the €50 million cap on eligible expenditure, subject of course to resource constraints.

Tourism

Tourism delivers income and jobs in every town and city and to every corner of our country. The abolition of the air travel tax last year will result in more than 1 million extra passengers through additional capacity on many existing routes, as well as the introduction of new services. The reduced 9% rate of VAT on tourism-related activities has been a great success and there are now an extra 23,000 employed in the sector since mid-2011.

This initiative is delivering and I am retaining the 9% VAT rate for these services.

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