BUDGET 2021 HIGHLIGHTS
Unprecedented times called for an unprecedented Budget and that is what Ministers Paschal Donohue and Michael McGrath delivered from the Convention Centre Dublin. At a total budgetary package of €17.75bn, Budget 2021 is the largest in size and scale in the history of the State with €17bn of that package going on expenditure.
The extraordinary level of spending is aimed at supporting business and employees impacted by Government restrictions. Significant capital expenditure for public infrastructure and to support the Health Service was also announced.
A recovery fund of €3.4bn is being created and €2.1bn has been put aside for contingency spending. The "Rainy Day" Fund of €1.5bn is now being accessed as well.
The Government was mindful of the sectors hit hardest by COVID-19 restrictions such as pubs, restaurants and hotels as well as entertainment and the arts. A new targeted cash payment was announced, the Covid Restrictions Support Scheme (CRSS), which applies to business premises where the Government restrictions directly prohibit or restrict access to customers. The scheme applies where businesses have been severely impacted (i.e. turnover is under 20% of turnover for the corresponding period in 2019) and is subject to a weekly cap of €5,000. The scheme is effective from today (13 October) until 31 March 2021.
In terms of Brexit, the assumption is that there will be no deal made between the UK and EU. There is €100m worth of business supports to help get prepared for the impact Brexit will have on importers and exporters.
The VAT rate for the hospitality sector was cut from 13.5 per cent to 9 per cent until the end of 2021 – a similar move was taken during the last financial crash and was broadly considered to be successful for the sector.
Income tax, USC and PRSI was broadly unchanged. Tax debt warehousing has been extended to 2019 income tax and 2020 preliminary tax liabilities for the self-employed.
The Government’s commitment to the 12.5% rate of corporation tax for trading activities was outlined once again and it was noted that the global rules regarding the taxation of companies will change in the coming years and will have an impact on the Irish exchequer returns from corporation tax.
As mentioned above, this is an extraordinary budget. If there were to be a positive change in one or two matters, such as a Brexit deal or an earlier roll out of a successful vaccine, then the spend could become more of a stimulus package in late 2021. Here’s hoping! - Kevin Doyle, Tax Partner and International Tax Coordinator at BDO Ireland.
View our in-depth industry analysis on the impacts of Budget 2021 on the Irish economy below:
Tourism & Hospitality Sector Overview
Food/Drink & Agri-Business Overview
Indirect Tax Measures
Real Estate and Construction
Knowledge Development Box & Digital Gaming