27 Sep 22
Budget 2023 - Key points
On 27th September 2022, Budget 2023 was formally presented by Ministers Paschal Donohoe and Michael McGrath.
Against the backdrop of a growing cost of living crisis, Budget 2023, an €11 billion tax package, focuses on alleviating the pressures of rising inflation on individuals and businesses across Ireland.
In his speech to the Dáil, Minister Donohoe recognised the nature of Ireland’s economy and it's particular exposure to unforeseen international market shocks.
The Department of Finance announced it has increased its forecasts for headline inflation to 8.5% in 2022 and just over 7% in 2023. With firms expected to hold back on investment, modified domestic demand forecasts have also been revised down to 1.25% for 2023.
That said, there are also a number of positive signals for Ireland’s economic performance over the last number of months. As of August 2022, unemployment stood at 4.3% and is projected to remain at relatively low rates over the coming year. Ireland’s public finances have exhibited a strong recovery following the Covid-19 pandemic. Minister Donohoe announced a general government surplus of €1 billion for 2022, and €6.2 billion for next year. Much of this growth is due to corporate tax receipts which are projected to exceed €20 billion by year end.
Key announcements for businesses operating in Ireland
Standard Rate Cut Off Point on income tax increased by €3,200 to €40,000.
Increase in the second Universal Social Charge (USC) band from €21,295 to €22,920, in line with the 80c increase in the minimum hourly wage recently agreed by the Government.
Officials instructed to engage on the issue of a third rate of income tax.
Increase in the Small Benefit Exemption annual limit from €500 to €1,000.
Introduction of the Temporary Business Energy Support Scheme designed to assist businesses with mounting energy costs over the winter months. The scheme will apply to businesses that carry a ‘Case 1 trade’ who experience a significant increase in their energy costs.
Key Employee Engagement Programme extended until the end of 2025.
Extension of the Special Assignee Relief Programme until 2025, but with an increase in the qualifying income to €100,000.
Four year extension of the Knowledge Development Box for intellectual property.
Corporate tax credit for audio-visual productions to be extended until 2028.
Excise reduction on petrol (21 cent per litre), diesel (16 cent per litre) and the implementation of a 9% VAT rate for electricity and gas until the end of February 2023.
Carbon tax increase to €48.50 per tonne.
VAT reduction on newspapers to 0% from the 1 January 2023.
Establishment of a working group to review the taxation of funds, assurance policies, other investment products and the use of Section 110 companies.
Work is underway at an EU level with regard to a windfall tax on energy companies.