PwC urges cut to capital gains tax in Budget 2027

Key recommendations from PwC include overhauling the R&D tax credit and a phased reduction in capital gains tax to 20%

In their pre-budget submission, PwC said there is a widening gap between multinational firms and the broader domestic economy.

Overhauling the R&D tax credit and a phased reduction in capital gains tax to 20% are among the key recommendations from PwC in their pre-budget submission.

The firm said that there is a widening gap between multinational firms and the broader domestic economy.

They also said that a reduction in capital gains tax aimed at encouraging investment and reinvestment in Irish businesses would help to retain business ownership here.

PwC also recommends introducing a reduced corporation tax rate of 6.25% for start-up and early-stage companies not within the scope of the global minimum tax rules.

PwC Ireland head of tax Paraic Burke said: “As global competition intensifies and economic conditions evolve, we emphasise that certainty, simplicity, and targeted investment will be key to sustaining Ireland’s competitive edge.”

While Ireland remains a global leader in attracting high-value research and development (R&D), PwC said there was a widening gap between multinationals and the domestic economy.

“The current R&D tax credit is increasingly misaligned with modern R&D delivery models, where outsourcing is often required to access niche expertise,” they said.

PwC recommends changes that would allow connected-party outsourcing to qualify for R&D tax credits, increasing the third-party outsourcing cap from 15% to 30%, and expanding outsourcing eligibility for industry collaboration with universities and higher education institutes.

In relation to sustainability and energy, the firm calls for action to unlock Ireland’s underdeveloped district heating sector, which accounts for less than 1% of national heating demand.

Recommended measures include a reduced Vat rate of 9% for renewable district heating, lower electricity taxation for industrial heat generation, and targeted grant support for network infrastructure.

In relation to home construction, they have recommended a tax credit linked to Building Energy Rating (BER) improvements and time-limited tax exemptions for the sale of refurbished derelict properties.