THERE WERE no surprises in the publication yesterday of the Finance (No 2) Bill, which gives effect to the Government’s jobs initiative. The Bill provides further detail on the range of incentives – and taxes – included in last week’s strategy for job creation.
“The central objective of this Finance Bill and the jobs initiative is to assist in the creation of jobs,” said Michael Noonan, Minister for Finance.
The tourism sector was pinpointed for various incentives in the jobs initiative and the Finance Bill gives more details on how these will be achieved.
As indicated, the €3 per passenger air travel tax will be abolished, and the Finance Bill empowers the Minister for Finance to pick a date after which the tax will no longer apply. However, it does not include details on when that date will be.
The Bill also provides for a second reduced VAT rate of 9 per cent, mainly aimed at the tourism sector, which will apply from July 1st, 2011, to December 31st, 2013. It will apply to a range of goods and services including restaurant and catering services; hotel and holiday accommodation; admissions to cinemas, theatres, certain musical performances, museums and art gallery exhibitions and fairgrounds or amusement park services.
There was also further detail on the 0.6 per cent levy which will be applied to pension schemes in order to raise € 1.9 billion to fund the jobs scheme. The levy, which will apply for four years and will be payable twice yearly at the rate of 0.3 per cent, will apply to occupational pension schemes, retirement annuity contracts and Personal Retirement Savings Accounts (PRSAs).
However, it will not apply to annuities which have been purchased with an insurance company, Approved Retirement Schemes (ARFs), or PRSAs which have been “vested” or drawn down.
The Bill also revealed the value of the assets subject to the levy will be based on the market value on May 19th for 2011, and on January 1st for 2012, 2013 and 2014, or, where scheme accounts are prepared, on the last date of the previous 12-month accounting period.
The research and development (RD) tax credit regime is also getting a boost, as the Bill provides for an enhancement of the legislation, by giving flexibility to companies in how they account for the credit. An amendment to the Taxes Consolidation Act, 1997, as proposed in the Bill, will give companies the option of accounting for it either on an above or below the line basis. This will help multinational companies market their Irish operations internally.
The Bill will move to second stage next week and is to be completed by June 15th.
