41% higher tax rate remains.

From 1 January 2013 the weekly PRSI exemption of €127 is being abolished.  It is proposed that the minimum annual PRSI contribution for self-employed earners will be increased from €253 to €500.  From 1 January 2014, unearned income such as rental income, investment income, dividends and deposit interest will be subject to PRSI.

Universal Social Charge (USC)

From 1 January 2013, the standard rates of USC will apply to those aged 70 years of age and over and medical card holders earning €60,000 and above.

A 10% rate applies to self-employed income over €100,000.

Maternity Benefit

Maternity benefit will be taxable for all claimants with effect from 1 July 2013.

Charitable Donations

From 1 January 2013, tax refunds on donations from all individual donors to charities and approved bodies will be repaid to the charity at a blended rate of relief of 31%.    An annual donation limit of €1m per individual donation will be introduced.

Benefit-in-Kind on preferential loans

The specified interest rate used in calculating the taxable benefit from preferential loans, other than home loans, has been increased from 12.5% to 13.5%.  The specified rate used to calculate the taxable benefit from home loans is decreased from 5% to 4%.

Film Relief

It is proposed that film tax relief scheme will be extended to 2020.  It is proposed that from 2016 individual investors will not receive tax relief on films but the film company will receive a tax credit.

Top Slicing Relief

From 1 January 2013, Top Slicing Relief will no longer be available in respect of ex-gratia termination payments of €200,000 or over.

DIRT & Exit taxes

33% on interest payments made annually or more frequently and 36% for payments made less frequently than annually.

With effect from January 2014, tax relief will only be available on pension contributions up to the level that provides an annual income of up to €60,000.

0.6% Pensions levy to be abolished from 2014.

Standard Fund Threshold (maximum pension fund at retirement for tax purposes) to remain at €2.3M.

Provisions to be made in the Finance Bill for the Introduction of a 3 year window to allow withdrawals of up to 30% from AVC’s. Withdrawals will be subject to tax at the marginal rate.

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.

The cash receipts basis threshold will increase from €1M to €1.25M with effect from 1 May 2013.

The reduced VAT rate of 9% for goods & services mainly related to the tourism industry will remain for 2013.

The unregistered farmer’s flat rate addition will be reduced from 5.2% to 4.8% with effect from 1 January 2013.

Capital Gains Tax

From 6 December 2012 the rate of capital gains tax will increase from 30% to 33%.

Relief for farm restructuring

Once off relief available from capital gains tax arising on the disposal of farm land for farm restructuring purposes.  The relief will apply in respect of transactions initiated within the period commencing 1 January 2013 and ending on 31 December 2015.  The sale and purchase of the farm land must occur within 24 months of each other.  The commencement of this relief is subject to EU State Aid approval.

Capital Acquisitions Tax

From 6 December 2012 the rate of capital gains tax will increase from 30% to 33%.

The current group tax free thresholds will be decreased by 10%.  Group A will be reduced from €250,000 to €225,000, Group B will be reduced from €33,500 to €30,150 and Group C will be reduced from €16,750 to €15,075.

This reduction applies in respect of gifts and inheritances taken after 5 December 2012. 

Household charge & Non Principal Private Residence Charge (NPPR)

The Household charge is to cease with effect from 1 January 2013.  While, the NPPR charge is to cease with effect from 1 January 2014. 

Unpaid arrears together with any interest and penalties as at 1 July 2013 will be collected through the new property tax system.  The rate of unpaid arrears in respect of the Household charge will increase from €100 to €200.

Local property tax

A local property tax on residential properties, including rental properties will be introduced with effect from 1 July 2013.  Collection will operate through a self-assessment system and will be administered by the Revenue Commissioners.

A half year charge will be payable in 2013 with a full year payable in subsequent years. 

Tax will be charged on the market value as assessed by the owner.  It will be levied at a rate of 0.18% for the first €1,000,000 and a rate of 0.25% will apply to any excess value over €1 million. 

The 0.18% rate is to remain unchanged for the lifetime of government, however a “local decision factor” allowing local authorities to vary the rate by up to + / - 15% will apply from 2015. 

The initial valuation obtained by owners will be valid up to and including 2016.  Valuation guidance will be issued by the Revenue Commissioners.  Valuations obtained from a competent valuer may also be used. 

Certain exemptions will apply in respect of the property tax.  These will be similar in nature to those introduced in respect of the household charge. 

In particular an exemption will be available for any new or previously unoccupied homes acquired before 31 December 2016.

The three year exemption will also apply to first time buyers who acquire homes in 2013 and residents in unfinished estates.  

Excise duty, carbon tax and VRT

From midnight 5 December 2012 the rates of excise duty on tobacco, beer, spirits and wine will increase. 

Rates of VRT and Motor Tax are to increase with effect from 1 January 2013. 

Carbon tax will extend to solid fuels on a phased basis.  A rate of €10 per tonne will apply from 1 May 2013 and a rate of €20 per tonne will apply from 1 May 2014.

There will be a rebate of excise duties on diesel from 1 July 2013 for hauliers.  Under State Aid rules Ireland must inform the EU Commission of this.