Corporation tax rate

No change to the 12.5% corporation tax rate.

3 year tax exemption for start-up companies

The relief from corporation tax on profits is being amended to permit the carry forward of unused relief into subsequent years.  As is currently the position the amount of relief that can be claimed in any year cannot exceed the permitted amount of Employers PRSI for that year.

Changes to R&D tax credit

In 2013 the first €200,000 of qualifying R&D expenditure will qualify for the 25% R&D tax credit on a volume basis.  Credit will continue to apply to incremental expenditure in excess of €200,000 compared to such expenditure in the base year 2003.

The Minister announced his intention to review the R&D tax credit regime in 2013.

Employment and Investment Incentive

This is being extended to 2020.

Extension of the foreign earnings deduction

This tax relief for employees currently applies to work related travel to BRICS countries and will be extended to travel to Algeria, Democratic Republic of Congo, Egypt, Ghana, Kenya, Nigeria, Senegal and Tanzania.

Close company surcharge

Currently the first €635 of rental and other investment income earned by a close company is exempt from the close company surcharge.  This amount is being increased to €2,000

Aviation sector

Accelerated capital allowances, over seven years, for expenditure on the construction of certain aviation specific facilities.  The allowances will be subject to restrictions on their utilisation and carry forward.

Real Estate Investment Trusts (REITs)

REITs will be listed companies which will invest in rental property.  Qualifying income and gains will be exempt from tax at the corporate level.  The REIT will be required to make distributions to investors annually which will be taxed in the hands of the investors.  REITS should provide a similar return for investors as a direct investment in property.

Taxation of micro enterprises

The Minister launched a consultation document inviting submissions on the introduction of a single business tax (SBT) for micro enterprises (with a turnover of less than €75,000) with a view to reducing tax compliance costs for these businesses.  The consultation period will run until 28 February 2013.

Proposals for SMEs

• A rebate for hauliers on diesel will be introduced from 1 July 2013.
• The PlusOne initiative is being finalised which is aimed at encouraging employers to hire workers who are long-term unemployed.
• The Minister also announced a number of measures to assist SMEs in accessing credit facilities.