Jobs Initiative Strategy - Mazars - Ireland

On 10 May, 2011, the Minister for Finance presented the Government Jobs Initiative strategy to the Dáil. This contains a number of measures designed to promote job creation and increase tax revenues. Details of the proposals are set out here.

Share-Based Remuneration – Abolition of Employer PRSI Charge
The Budget in December 2010, introduced employer PRSI on share based remuneration. The Minister has recognised the potential negative impact and has therefore announced that he is going to abolish Employer PRSI on share- based remuneration with effect from 1 January 2011.

Employers’ PRSI
As of 1 July 2011, Employers PRSI of 8.5% is to be halved on jobs that pay up to €356 per week. This reduction is for both new and current employees earning up to this income level. This reduction of employers PRSI is until the end of 2013.

The existing Employer Job (PRSI) Incentive Scheme is to remain in place until the end of this year.

Pension Levy

The measures in the Jobs Initiative will be funded by a new annual 0.6% pension levy. The levy is to be a temporary levy on funded pension schemes and personal pension plans. This is to apply for 4 years, commencing in 2011. The levy will apply at a rate of 0.6% to the capital value of assets under management in pension funds established in the State.

Pension funds established in Ireland and providing services and benefits solely to non-resident employers and members will not be subject to the levy

The Minister also reiterated that there will be a review in relation to reducing the tax relief on pension contributions following the Governments agreement with the EU/IMF to reduce the tax relief on pension contributions from next year.

Air Travel Tax
To encourage overseas visitor numbers, the Minister is to temporarily reduce the air travel tax rate to zero. This is to take effect following a Ministerial Order. The Order being signed is subject to agreement being reached with airlines regarding increased passenger numbers.

This measure will be subject to review in 2012.

R&D Tax Credit
The Minister announced his intention in the next Finance Bill to amend the R & D tax credit legislation to enhance flexibility for companies in how they account for the credit, giving the option to account for it above or below the line.

The commitment to retain the 12.5% Corporation Tax Rate was re-confirmed

VAT
The jobs initiative strategy as outlined envisages a lowering of the reduced VAT rate being adopted in the tourism sector and certain other related activities with a view to stimulating activity to generate additional tax revenues and promote job creation.

This reduced 9% VAT rate will apply mainly to restaurant and catering services, hotel and holiday accommodation and various entertainment services such as admissions to cinemas, theatres, museums, fairgrounds, amusement parks and sporting facilities.
In addition, hairdressing and printed matter such as brochures, maps, programmes and newspapers will also be charged at the new rate.

The reduced 9% VAT rate will take effect from 1 July 2011 until the end of December 2013.

All other goods and services to which a reduced VAT rate currently applies will remain subject to the 13.5% rate.

The accompanying link to the Revenue Commissioners website provides further information on the proposed VAT rate changes.

revenue.ie

Full details of the activities to which the new lower reduced VAT rate will apply will be contained in the Finance Bill to be published shortly.

National Internship Scheme
The Minister for Social Protection has also announced a new National Internship Scheme for 5,000 people who are currently on the live register. The Scheme will provide work experience opportunities for jobseekers in the private, public or community and voluntary sectors.

The 5,000 places are part of 20,900 new and additional places in training, education and work experience programmes announced as part of the Government’s Jobs Initiative.

Participants will receive €50 in addition to their existing social welfare payment and they will retain all of their secondary benefits. The Scheme will not displace existing workers.

For more information please contact Frank Greene.