Latest news with #PaschalDonohoe
Irish Post
2 days ago
- Business
- Irish Post
FED Tax break for foreign businesses asked to be extended
THE IRISH Department of Finance is facing calls to extend the Foreign Earnings Deduction (FED), a tax incentive aimed at promoting Irish business growth in overseas markets. The FED allows Irish tax residents who spend time working in specified countries abroad to reduce their income tax liability. The relief can be applied to up to €35,000 of income annually, potentially saving an individual up to €14,000 in taxes each year. To qualify, a person must spend a minimum of 30 days working in one of the eligible countries within a single tax year. First introduced in 1994, the FED was discontinued in 2003 but later reinstated in the 2012 budget by then-Finance Minister Michael Noonan. At the time, the measure was framed as part of a broader initiative to help Irish companies access and grow in emerging markets. Initially covering just five nations—Brazil, Russia, India, China, and South Africa—the scheme has expanded over the years to include 30 countries. Additions have focused on Asia and the Middle East, with Singapore, South Korea, Saudi Arabia, Qatar, and Bahrain now among the eligible destinations. The United Arab Emirates currently sees the highest usage of the relief. The eligibility criteria have also changed. Originally requiring 60 qualifying days abroad, the threshold was lowered to 40 in 2015 and further reduced to 30 days in 2017 to make it more accessible. According to figures from 2022—the most recent data available—the relief cost the state €3.2 million. That year, 447 individuals claimed the deduction, down from 720 in 2019. However, it remains unclear to what extent the pandemic influenced this drop. The Department of Finance is currently conducting a full review of the FED, with results expected ahead of the budget announcement on October 7. Finance Minister Paschal Donohoe is expected to reveal any proposed changes at that time. Stakeholder consultations form a key part of this review process. According to the Tax Strategy Group, industry feedback so far highlights the importance of FED in encouraging international expansion. Many stakeholders have called for not only a higher level of relief to better support overseas assignments but also an expanded list of qualifying countries to reflect shifting global trade dynamics. The same report from the Tax Strategy Group stated that in light of the uncertain global economic conditions, diversifying trade routes is more critical than ever for Ireland's economic resilience. Speaking at the National Economic Dialogue, Foreign Affairs and Trade Minister Simon Harris echoed this sentiment, stating that trade diversification is becoming increasingly essential. 'There's a real opportunity to be more ambitious in how we explore and enter new markets,' he said. 'This includes efforts within the EU, post-Brexit UK engagement, and tapping into global opportunities. We're supporting Irish exporters to grow their international footprint and make use of existing EU trade deals.' As businesses face rising costs and geopolitical uncertainty, expanding access to tax incentives like the FED could prove to be a timely move in supporting Ireland's global trade goals.
Irish Examiner
2 days ago
- Business
- Irish Examiner
Call for Government to republish summer budget projections after US-EU trade deal
The Government has been pushed to republish its summer budget projections in light of a US-EU agreement on tariffs. The summer economic statement published last week confirmed the total size of Budget 2026 would be €9.4bn, but was based on a 10% tariff framework. In light of the 15% agreement, Social Democrats finance spokesman Cian O'Callaghan said that the Government must re-draft the document. 'I welcome that a deal has been done which avoids a catastrophic trade war. However, there is much that is still unclear about what has been agreed. What is beyond doubt is that a 15% tariff rate will be very damaging for many Irish businesses. 'It is less than a week since the Government published its summer economic statement, using an assumption of no tariffs. This was despite the dogs on the street being aware that a 10% tariff rate was the best possible outcome. 'The Government must now publish an updated summer economic statement which outlines the impact of a 15% tariff rate on the national finances and the budgetary calculus.' In the document itself, the authors warn that "if there is a deterioration in the tariff landscape, Government will recalibrate its fiscal strategy — reducing the quantum of the budgetary package — in order to ensure that the public finances remain on a sustainable trajectory" but did not give details of alternative scenarios. The document says that while the economy is in good condition, the public finances "are not as healthy as the headline figures suggest". "While the headline budgetary position is in surplus, this is almost entirely due to a handful of large corporate taxpayers. "Over the medium term, structural changes – an ageing population, the phasing out of fossil fuels and other greenhouse gas emitters, the need to facilitate the digital transition, and the fragmentation of economic activity along geopolitical lines – will have profound implications for the Irish economy and for the public finances." Finance minister Paschal Donohoe said that re-issuing the statement would not make sense as it is merely a statement of policy and not a prescriptive set of accounts. "The department undertakes two sets of forecasts each year – both of which are aligned to the European fiscal cycle (spring in the annual progress report and autumn at budget time). "While the baseline tariff rates have increased, it is important to look at the agreement in the round. Indeed, the updated US-EU tariff arrangements will also provide greater levels of certainty, which will help support economic activity." Labour leader Ivana Bacik, meanwhile, called for "proactive" measures to protect jobs. 'There's no question that this will have consequences. We're calling on the Government to be proactive. They must engage with the Irish businesses impacted to ensure jobs are protected and new market opportunities pursued. Read More Paul Hosford: US tariffs take shine off summer economic statement
Irish Independent
2 days ago
- Business
- Irish Independent
Businesses ask for extension of foreign-earnings tax break
The FED can be claimed by people who are tax-resident in Ireland but who work overseas for part of the year in certain other countries. It provides relief from income tax up to €35,000 of annual pay, which means the most that can be saved in one year is €14,000. The person must spend a minimum of 30 days working in one of the relevant countries in a tax year. First introduced in 1994, the relief was cancelled in 2003, but reintroduced in Budget 2012 by Michael Noonan with the stated aim of supporting 'our export drive by aiding companies seeking to expand into emerging markets'. The original list had just five countries – the so-called BRICS of Brazil, Russia, India, China and South Africa. This has been expanded on several occasions since, and the total number of countries now covered is 30. In the push for Asian markets, the likes of Singapore and Korea have been added, and several Middle Eastern countries are there too – including Saudia Arabia, Qatar and Bahrain. The relief is now most often claimed by people working in the United Arab Emirates. The minimum number of qualifying days required in order to be eligible has also been steadily reduced, from an initial 60 to 40 from 2015 onwards, and to the current 30 from 2017. The cost of the tax relief to the Exchequer in 2022 – the most recent year for which data is available – was €3.2m. There were 447 claimants, down from the 720 recorded in 2019, but it is not clear as yet how big an impact the Covid pandemic had. The Department of Finance is currently doing a review of FED, with the final report due to be completed in advance of the Budget on October 7, when minister Paschal Donohoe will announce any tax changes. 'Part of the review process will involve gathering stakeholder feedback and reflecting on their insights,' according to a recently published report by the Tax Strategy Group. 'Based on engagements with industry thus far, stakeholders have asserted that FED plays an important role in encouraging and incentivising Irish businesses to expand their operations internationally. The most common proposals put forward by stakeholders have been to enhance the level of the relief to make trips abroad more worthwhile for employees and to extend the list of qualifying countries to further encourage diversification of markets.' The report by the Tax Strategy Group notes that the current economic uncertainty underlines the importance of building resilience, and that a Government push towards trade diversification could help promote this. In his speech to the National Economic Dialogue, a pre-Budget discussion forum, Foreign Affairs and Trade Minister Simon Harris said the diversification of trade is 'more important than ever before', and that a set of actions focused on trade and market diversification is underway. 'There is an opportunity now for new ambition in our approach to market diversification,' Mr Harris said. 'This can encompass EU, UK or further afield. We are working with Irish exporters in exploring new markets, leveraging existing EU trade agreements, and strengthening their international presence.'
Irish Independent
3 days ago
- Business
- Irish Independent
The war on inflation is over and we won — regardless of the price of food
Winning the inflation war was never about dropping prices, just retarding their rise ahead. And, on that basis, globally victory is achieved Today at 00:30 Irish house prices surged in June, rents rose 4.6pc year-on-year and food costs were also up — with meat surging a massive 22pc. All of this, and especially food price rises, feeds a lingering fear that Irish inflation is resurging — undermining faith in Finance Minister Paschal Donohoe's claims of lower 2025 inflation.
The Journal
6 days ago
- Business
- The Journal
Department of Finance clarifies hospitality VAT cut would cost less than €1bn mooted by Minister
A SPOKESPERSON FOR the Minister for Finance has clarified that the cost of reducing the VAT rate for hospitality would be less than the €1bn figure mooted by the minister earlier this week. At €1bn, the cost would equate to two-thirds of the total €1.5bn available to the government for tax cuts in this year's Budget. On Tuesday, during a press conference on the Summer Economic Statement, Minister for Finance Paschal Donohoe told reporters that the one-year cost for reducing the hospitality VAT rate to 9% for restaurants and hotels would be between €950mn and €1bn. However, later in the press conference, he said he would need to clarify if that figure did include hotels. A spokesperson for the minister told The Journal today that, based on CSO data, the total one-year cost for restaurants and hotels is actually €810mn. Advertisement This is split €675mn for restaurants and cafes and €135mn for hotels. The cost for hairdressers would be an additional €40mn. Meanwhile, the Tax Strategy Papers published this afternoon by the government highlight that it is possible to change the VAT rate for one of these groups without changing the other. However, it said the principle of fiscal neutrality requires universal application within the same sector. This means that if accommodation stayed at 13.5% it would have to include all accommodation services, including B&Bs and small hotels. While the Minister for Enterprise Peter Burke has again stressed today that he is in favour of reducing the VAT rate, Donohoe stressed earlier this week that no decisions have yet been made. 'The exact component of what the tax package will be and the other tax measures that will be in it, I can't answer that question until Budget day,' Donohoe said. Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
