Republic will not change low rate of corporation tax: Minister

THE Republic’s Budget has set aside support of hundreds of millions of euro for businesses and farmers to mitigate the impact of Brexit.

Finance Minister Paschal Donohoe revealed a €300m (£268m) loans scheme — backed by the European Investment Bank Group, the European Commission and the Strategic Banking Corporation of Ireland — for small businesses, including the food sector.

And €50m (£45m) is being set aside for farmers and agri-businesses, along with an additional €25m (£22m) in loans.

The minister also announced 40 staff will be hired in Ireland’s Department of Business, Enterprise and Innovation and enterprise agencies to meet what he said were “challenges and opportunities arising from Brexit”.

And the minister — who was presenting his first Budget in the Fine Gael government — upped the level of stamp duty on commercial property transfers from 2% to 4%. However, his message on the Republic’s much-maligned corporation tax rate of 12.5% was as clear as that of any of his predecessors.

“Our position is clear,” Mr Donohoe said. “The 12.5% tax rate is, and will remain, a core part of our offering.”

The Republic has come under pressure from the EU for maintaining a lower main rate of corporation tax than other member states.

Kevin McLoughlin, head of tax for business advisors EY Ireland, said: “From a business perspective, the main news is in the commercial property sector, with a significant increase in the rate of stamp duty on commercial property transfers, subject to a partial refund for property that is developed for residential use within a three-year period.”

And Joe Bollard, the firm’s head of international tax, said it welcomed the minister’s decision to stick by its 12.5% corporation tax.

“With significant risks for the Irish economy it will be important that Ireland continues to innovate through tax policy to maintain Ireland’s competitiveness in the face of increasing competition,” he said.

The finance minister also opted to keep the Republic’s 9% VAT for hospitality and tourism businesses. The rate is significantly lower than the main VAT rate of 23%, and the UK’s rate of 20%.

It has prompted calls from the industry in Northern Ireland for a similar exemption for the industry in the province. Paul Diver, owner of the Sand House Hotel in Rossnowlagh, Co Donegal, welcomed the decision to retain the lower rate.