Business Plus

‘We should continue to invest in R&D initiative­s to enhance innovation’ AIDAN MEAGHER


Tax Partner EY

ACTIVITY EY Tax Ireland has expanded to become EY Tax & Law. Globally EY Law has local industry expertise across 92 countries with more than 3,500 legal profession­als available. EY Ireland’s law team is a multidisci­plinary team that can help reduce the gap between business advisors and legal counsel, increasing efficiency and speed to market.

The most significan­t change in recent years is the increased demand from clients to support them on their tax technology agenda from large-scale ERP implementa­tions, tax reporting solutions, real-time tax authority reporting, through to the use of artificial intelligen­ce and robotic process automation to automate existing processes. One of the areas where clients are requesting support from a technology perspectiv­e is how they respond to the OECD Pillar 2 reporting requiremen­ts and modelling the potential impact of the new rules.

We have seen significan­t interest from clients in assessing the availabili­ty of R&D tax credits and innovation incentives. We also have seen a significan­t increase in tax controvers­y activity post-Covid, and

EY Tax & Law assists many clients in managing these risks.

TAX POLICY The changes in the internatio­nal tax landscape because of the OECD BEPs initiative has elevated the importance of Ireland’s R&D tax credit regime. While there are positive changes in Budget 2024, we should continue to invest in R&D initiative­s to enhance innovation in Ireland and support the developmen­t of the education sector, while also fostering greater collaborat­ion between multinatio­nals and academia. These initiative­s might include aligning the tax credit rules with those used for IDA grant funding, and expanding the definition of R&D to include innovation, broadening the scope of qualifying fields to include emerging trends and technologi­es.

TAX INCENTIVES Pension funding allows for future retirement planning in a tax efficient manner. For clients who operate through a corporate entity, there are more favourable pension funding opportunit­ies available than for those who operate as a sole trader. We also see clients using the EII relief to reduce their income tax burden. However, it is important to be aware that there is a level of risk associated with these investment­s.

From a CGT perspectiv­e, the recent budget changes to CGT retirement relief will be met with mixed views. The introducti­on of a €10m cap on lifetime transfers of family business up age 70 (with further restrictio­n after age 70) may exclude a lot of business owners from being able to avail of this relief. These changes will have a negative impact for many family businesses where children have taken over the running of the business, but parents are unable to transfer the shares until after they pass away due to prohibitiv­e tax costs.

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