The Irish Tax Institute has called for a clear timeline to be announced in next month’s budget setting out how the top marginal income tax rate will be reduced below 50% over a three year period.
The professional body for tax practitioners also said that marginal income tax thresholds should be increased to raise the entry point to the top rate of income tax.
The institute also said that self-employed taxpayers – many of whom generate jobs in the economy – should not be paying higher marginal tax rates than employees.
It called on the Government to allow the 10% USC rate on self-employed individuals to expire at the end of the year as planned. This would reduce the USC charged on the self-employed to 7%, the same rate as most other taxpayers.
The Special Assignee Relief Programme – a tax break for senior executives in Foreign Direct Investment companies – has not worked as intended, the institute said.
A new targeted regime that provides effective, competitive relief for FDI and domestic businesses seeking mobile executives is required to replace the SARP, it urged.
In 2012, just 15 individuals applied for SARP relief. The ITI contrasts this with the Netherlands, where a relief scheme for overseas executives attract between 10,000 and 12,000 applications each year.
On corporation tax, the ITI said Ireland needs a certain and predictable tax regime for multinational companies. It said a communications strategy to address the certainty investors require is vital.
The tax treatment of Intellectual Property (IP) must be attractive and in-line with those offered by competitor countries, it added.
For domestic business, the institute said the Entrepreneur’s Relief introduced in Budget 2014 needs to be reviewed to compete with the low rates available for active business investment in competing jurisdictions such as the UK.
The Employment and Investment Incentive (EII) should also be improved to support investments in active Irish businesses, while the Seed Capital Scheme (SCS) should be improved to assist individuals in starting their own business.
All of these areas were subject to consultations with the Department of Finance during the year, as was a review of taxes on the agri-business sector.
The ITI believes changes to the agri-business tax regime will be announced in the Budget next month.
