Irish taxation policy working against Government's own objectives, warns tax institute 

Irish Tax Institute is calling for personal marginal tax rate to be reduced to 50% from 52.2%

Tanaiste and Finance Minister Simon Harris 

Small businesses and restaurants are scaling back modest staff gestures such as retirement lunches and gifts for special occasions due to concerns around compliance obligations, the Irish Tax Institute has said. 

Launching its pre-Budget submission on Friday, the institute said that these obligations, part of the Enhanced Reporting Requirements (ERR) introduced in January 2024, are "directly undermining" the Government's hospitality supports introduced in Budget 2026.

The Institute is calling for Ireland's personal marginal tax rate to be reduced to 50%, noting that the current rate of 52.2% is hampering Ireland's ability to attract and retain international workers.

The Institute also said that proposed changes to the Tax Appeals Commission (TAC) would, if enacted, remove taxpayers' automatic entitlement to private hearings, making the appeals process less accessible, despite the fact the TAC was established to provide an efficient, accessible and effective alternative to the Courts for tax appeals.

It is also urging for a reduction in Ireland's capital gains tax rate from 33% to 25% for active business assets, pointing out that Ireland's CGT rate remains one of the highest in Europe, restricting investment and discouraging business owners from scaling firms.

The organisation has cautioned that proposals in the joint consultation by the Department of Finance and Revenue on eWithholding Tax (eWHT) would create cashflow issues for subcontractors, inevitably resulting in increased costs on housing and infrastructure projects. 

It says this approach runs counter to the Government's National Development Plan and the stated need to accelerate the delivery of housing.

Speaking on publication of the submission, Shane Wallace, President of the Irish Tax Institute, said: “Ireland enters Budget 2027 from a position of economic strength, but that strength cannot be taken for granted. There are areas where tax policy is working against its own intent, and examples of where current proposals will do likewise. Budget 2027 is an opportunity to fix that.

“Taxation remains one of the most effective policy levers available to the Government. These are the levers within the Government's grasp, and they are ones that our European peers are already pulling.”