‘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.