The Irish Minister for Finance, Michael Noonan, introduced a Jobs Initiative yesterday, designed to improve Irish economic competiveness and stimulate job creation. The Jobs Initiative included a number of measures dealing with business and employment taxes, including:
- Commitment to keeping the 12.5% Corporation Tax Rate
- Abolition of Employer’s PRSI charge on share based remuneration
- Temporary halving of the lower rate of Employer’s PRSI
- Amendment of the R&D tax credit regime to enhance flexibility in how companies can account for the credit
- Introduction of a new lower rate of VAT of 9% in respect of tourism-related services
- Air Travel Tax reduced to zero
The measures introduced in the Jobs Initiative have to be self-funding, and as widely flagged, the Minister has introduced a temporary levy of 0.6% on the capital value of pension funds to fund the above measures.
Employer’s PRSI
The application of Employer’s PRSI on share based remuneration, which was introduced by Finance Act 2011, has now been reversed. The Employer’s PRSI charge on such remuneration will be abolished, the change being effective from 1 January 2011.
It appears that the 4% Employee PRSI charge will remain, but it is assumed that this will only apply to share based remuneration which are not evidenced by a written agreement predating 1 January 2011, as previously announced.
The lower 8.5% Employer’s PRSI rate will be halved to 4.25% for employees earning less than €356 per week with effect from 1 July 2011. This provision is expected to apply until 31 December 2013.
The Minister also announced the retention of the existing Employer Job (PRSI) Incentive Scheme until the end of 2011. This provides for a 12 month employer PRSI exemption in respect of qualifying new positions which are filled by qualifying new employees during the 2010 calendar year.