23 Sep 2021 | 12.27 pm
KPMG Issues Pre-Budget Submission
'Keep Ireland competitive'
23 Sep 2021 | 12.27 pm
KPMG says that maintaining competitiveness is critical in light of the triple threats of Brexit, international tax changes, and the ongoing economic recovery from Covid-19.
In the firm’s pre-budget submission to government, KPMG is calling for action in Budget 2022 to keep Ireland competitive for both domestic businesses and multinationals based or looking to locate and invest here.
Those actions include include addressing issues with housing, further incentivising growth in Ireland’s domestic economy, reviewing personal taxes and the cost of employment, and the introduction of tax policy tools to promote sustainable behaviour by both businesses and consumers.
The firm has also highlighted the new post-Covid risk of more mobile workers choosing to live and work in other countries, and the potential negative impact this could have on tax receipts in Ireland in the future.
Head of tax Tom Woods (pictured) said: “Keeping Ireland competitive is one of the business community’s main hopes for Budget 2022. Irish business is reasonably optimistic about growth opportunities, and the challenge will be to both protect our strong appeal to multinational investment and stimulate growth in domestic enterprise.
“The last two years in particular have shown just how critical FDI is to Ireland’s economy, while Irish-owned businesses, which employ almost one million people and are much more geographically spread across the country, have never been so important. There is a significant opportunity to capitalise on the build-up of savings over the last 18 months and use tax policy to stimulate more investment in domestic businesses.”
On housing, KPMG warns that the housing crisis is impairing Ireland’s competitiveness for the location of mobile talent and substantial business. Among other measures, the firm recommends:
- Temporarily reducing VAT on new homes
- Reforming and reinstating CGT rollover relief to help free land in urban centres, and reinstating indexation relief for CGT
- Reforming the taxation of rents earned by active rental businesses to encourage more Irish landlords into the market and rebalance the investment in Irish housing stock with foreign institutional investors.
- Introducing an incentive scheme to encourage individuals and communities to contribute savings towards investments aimed at increasing Ireland’s housing stock.
KPMG has also suggested a broad review of the personal tax regime, and in particular the marginal tax cost for Irish workers and employers.
It also calls for a limit to the earnings base on which employer and employee social security contributions are levied, as in countries like Germany, Spain, Greece, or Singapore.