Tuesday, 8 October 2019
Financial Resolutions - Budget Statement 2020
-----including Bord na Móna and the relevant unions, and will work closely with the National Economic and Social Council, NESC, and with a local task force. Investment of this scale in energy efficiency will support more than 400 environmentally sustainable jobs, with up to 100 more jobs through expanded peatlands rehabilitation.
Other climate related tax changes
In relation to tax measures and in support of climate and public health policy, I am replacing the 1% diesel surcharge introduced last year with a nitrogen oxide, NOx, emissions-based charge. This surcharge will apply to all passenger cars registering for the first time in the State from 1 January 2020. The charge will apply on a euro per milligram-kilometre basis, with the rate increasing in line with the level of nitrogen oxide emitted. The surcharge reflects the detrimental effect of these emissions on our environment and will have a particular impact on older, more pollutant cars. In addition, in the finance Bill, I will introduce an environmental rationale for benefit-in-kind for commercial vehicles from 2023; extend the benefit-in-kind zero rate on electric vehicles to 2022; extend vehicle registration tax, VRT, reliefs for conventional and plug-in hybrids to 2020, subject to CO2 thresholds; reduce qualifying CO2 thresholds for reliefs in respect of capital allowances and value added tax, VAT, reclaim on commercial vehicles; and provide additional relief through the diesel rebate scheme to hauliers to compensate that sector at a time of risk for them and us for the increased cost of fuel.
Furthermore, in line with the recommendation in the climate action plan, I am equalising electricity tax rates for business and non-business. These are necessary, and I acknowledge challenging, changes to support our transition to a low-carbon economy. This is important across all sectors, including for our businesses.
SUPPORTING IRISH BUSINESS
This is because more people are employed in our country today than ever before and this reflects the vital contribution that businesses make to our economy. Our goal in government is to support businesses to compete both at home and abroad. This is even more important with Brexit approaching. Future Jobs Ireland, along with Project Ireland 2040, Global Ireland 2025 and the climate action plan, represent an integrated approach to prepare for the opportunities and challenges of the future. The Government is backing businesses by allocating nearly €1 billion to the Department of Business, Enterprise and Innovation in 2020. This is a 2% increase and will allow the Department and our enterprise agencies to continue to support business into the future. Ten million euro of this increase will go towards the disruptive technologies innovation fund, meaning a total amount of €30 million will be available for co-funded projects involving enterprises and research partners in 2020. One of the key challenges for our small and medium enterprises, SMEs, is Brexit and I am conscious that a disorderly Brexit will present unique challenges. This is why we already have in place a suite of supports for enterprises, including the Brexit loan scheme and the future growth loan scheme, which are providing up to €600 million in supports for businesses. I am also announcing today a timely package of improvements to a number of tax supports for Irish business.
Key Employee Engagement Programme, KEEP
I am providing for KEEP to apply to company group structures as well as allowing for greater flexibility for employees to move within such structures. I am also adjusting the rules of the scheme to allow for part-time and family-friendly working arrangements for KEEP employees. These changes are subject to State aid approval.
Employment and Investment Incentive, EII
I also intend to continue the reform of EII, which I started last year. I am allowing for full income tax relief to be provided in the year of investment rather than splitting it over years one and four as has been the case up to now. I also intend to increase the annual investment limit for the incentive to €250,000 and provide for a new €500,000 annual investment limit being introduced for those investors who are prepared to invest in EII for ten years or more. The legislation will provide that these changes to EII will apply from today's date. Full details regarding KEEP and EII will be included in the finance Bill.
Research and Development Tax Credit
Research and development plays an important role in the economy by contributing to innovation and productivity and ensuring that Ireland is competitive in attracting quality employment and investment. That is why I am pleased to announce a number of changes to our long-standing research and development tax credit, with a particular focus on supporting claims to the credit by smaller companies. First, I am increasing the credit from 25% to 30% for micro and small companies, and I will allow an improved method of calculating the limit on payable credit. I am also introducing a new provision to allow micro and small companies to claim the tax credit on qualifying pre-trading research and development expenditure before commencing to trade. While pre-trading, the credit will be limited to offset against VAT and payroll taxes. These measures will be introduced subject to State aid approval.
Finally, in respect of all claimants, I am increasing the current limit to third level institutes of education from 5% to 15%. This may be of particular benefit to smaller companies who rely on outsourcing to undertake research and development, and it will also support research and development activities in the third level sector.
Special Assignee Relief Programme, SARP, and the Foreign Earnings Deduction, FED.
Earlier this year, I commissioned an independent review of the SARP and the FED. The review confirms the rationale for the existence and continuation of both these schemes. In addition to the changes to the supports that I have just mentioned, and consistent with the findings of the review and my Department's tax expenditure guidelines, I will extend SARP and FED until the end of 2022.
Revised Capital Gains Tax Entrepreneurial Relief
Following the findings of an external review of the revised capital gains tax entrepreneurial relief, I do not propose to make any changes to the relief at this time but have asked my Department to consider the outcome of the review to determine any changes that could be made to the relief to better support entrepreneurs and entrepreneurial activity.
In order to allow larger microbreweries to expand, particularly with regard to their export sales, I am increasing the qualifying production threshold from 40,000 hl to 50,000 hl. I am retaining the cap of 30,000 hl as the volume of relief upon which claims can be made.
In recognition of the difficulties experienced by small independent bookmakers, I am introducing a relief from betting duty and betting intermediary duty up to a limit of €50,000 per calendar year. This is subject to the conditions laid down in state aid regulations. Another key area we must secure for the future is our rural economy, which supports thousands of jobs-----