Download Ireland`s National Recovery Plan

Ireland’s
National
Recovery Plan
Implications for Business
bri e fing
The Government of Ireland has published a four-year fiscal and
economic plan which:
• confirms that the current 12.5 per cent rate of corporation tax will
remain; and
• heralds important changes in other categories of tax and in State
expenditure.
On 24 November 2010, in the context of anticipated access by Ireland to
funding from the EU and the International Monetary Fund (“IMF”), the
Government of Ireland published the “National Recovery Plan 2011-2014”
(the “Plan”). Despite some political uncertainty in Ireland currently, the
Plan has been endorsed by the EU Commission and by the IMF and seems
likely to be implemented.
This briefing sets out the key points of the Plan for those doing business
in Ireland.
Ireland’s
National
Recovery Plan
Economic Policy and Context
While many economic indicators suggest
that Ireland is emerging from recession,
it is necessary to provide capital to certain
banks and to address the structural budget
deficit by adjusting the balance between
State income and expenditure. This
adjustment will accompany a range of
initiatives to promote competitiveness,
growth and employment and to retain the
strong attraction of Ireland as a place in
which to do business, and particularly for
investors from outside Ireland.
Business Taxes: Corporation Tax Rate Unchanged
A key message in the Plan and
in Government statements is the
“unambiguous” confirmation that there
will not be any change to the current 12.5
per cent rate of corporation tax.
Media reports of the views of other EU
Member States underline the legal position
that the setting of this rate is a matter for
the fiscal policy of Ireland only.
Business Climate: Competitiveness, Growth and Employment
The Plan expresses strong support for a
number of international business sectors
in Ireland, including the International
Financial Services Centre and the ICT and
life sciences sectors, as well as further
support for Ireland’s green economy
initiative and for the digital economy and
the smart economy generally.
Other initiatives include a tax-efficient
scheme (which will be launched in 2011)
to encourage investment in businesses
that create employment, and early actions
to reduce waste and energy costs for
businesses.
State Spending
Underpinning the Plan is a reduction of
€15bn in the budget deficit over the four
years of the Plan through a combination
of €10bn in spending cuts and €5bn in
additional tax and new revenues, but
with no change to the 12.5 per cent rate of
corporation tax.
mccann fitzgerald · november 2010
It is anticipated that the budget deficit will
reduce below three per cent of GDP by 2014,
positioning Ireland favourably to continue
as a preferred location for foreign direct
investment.
Ireland’s
National
Recovery Plan
Further information on the Plan is available from:
John Cronin
Peter Osborne
Chairman
Consultant
ddi +353-1-607 1284
ddi +353-1-611 9159
email
john.cronin@
mccannfitzgerald.ie
email
peter.osborne@
mccannfitzgerald.ie
or from your usual contact in McCann FitzGerald.
Principal Office Riverside One, Sir John Rogerson’s Quay, Dublin 2
Tel: +353-1-829 0000 | Fax: +353-1-829 0010
Brussels 40 Square de Meeûs, 1000 Brussels
Tel: +32-2-740 0370 | Fax: +32-2-740 0371
London St Michael’s House, 1 George Yard, Lombard Street, London EC3V 9DF
Tel: +44-20-7621 1000 | Fax: +44-20-7621 9000
Email [email protected]
© McCann FitzGerald, November 2010
www.mccannfitzgerald.ie
This document is for general guidance only and should not be regarded as a substitute for professional
advice. Such advice should always be taken before acting on any of the matters discussed.