Budget 2004 - encouraging business

Although the benefits for the average PAYE worker in Budget 2004 are negligible, the pro-business measures announced by the Minister for Finance, Charlie McCreevy, have generally been welcomed with enthusiasm.

R&D expenditure
After intensive lobbying, a tax credit has been introduced for incremental R&D expenditure by companies.  This will have the effect of allowing 20% of expenditure to be set off against corporation tax in any given year.  The scheme will initially be in place for 5 years after which it will be reviewed.  His proposal to exempt transfers of intellectual property from stamp duty in the forthcoming Finance Bill has also been welcomed.  To date, stamp duty in this area has been costly and a very real disincentive for many businesses.

Film industry
The film industry has also benefited with the extension of Section 481 tax relief for investment in film production until the end of 2008, with an increase in the ceiling per film to €15 million from 2005.  This reaffirms Ireland’s position as a prime location for film production. 

Subsidiaries
It has been proposed that the disposal of subsidiary companies in the EU and in countries with which Ireland has a tax treaty be exempted from Capital Gains Tax.  Many have welcomed this and it is hoped that it will attract many more international groups to Ireland once in place.

Area-based tax incentive schemes
Finally, a number of area-based tax incentive schemes have been extended until 31 July 2006.  There has been widespread pressure from businesses and individuals alike to finalise properties in these tax incentive areas to ensure that the maximum relief could be availed of.  It is hoped that this will provide the opportunity for many developments to be finished properly without any further pressure and time constraints.  With the extension of these schemes, and no change in either stamp duty or capital gains tax, it appears that investors will continue to play a huge role in the residential property market in the year to come.

Jackie Buckley
December 2003