Jobs strategy based on tax and investment scheme
The existing three-year corporation tax exemption is being extended to new companies starting up in 2011 but, to try to boost job creation, reliefs will be calculated so that they are linked directly to the number of workers employed.
Also being extended is the PRSI exemption scheme introduced this year that exempts employers for one year from paying their share of social insurance contributions for new staff taken on who have been at least six months unemployed.
A revamp of the Business Expansion Scheme will also take place, subject to approval by the European Commission which will vet it for any breaches of the prohibition on state aid to business.
Under the proposed revamp, tax reliefs will be available on investments of up to €10 million, compared to €2m at present. Up to €2.5m of that figure can be invested in any one year and still be eligible for reliefs compared to €1.5m in any one year at present.
Reliefs for the construction industry are also changing, with the 35% rate of Relevant Contracts Tax being reduced to 20% for subcontractors registered for tax while the higher rate will continue to apply to unregistered operators.
Enterprise Minister Batt O’Keeffe said the change would improve cash flow for subcontractors and act as a disincentive for black market operators.
The minister also announced 15,000 new ‘labour market activation’ places for unemployed people to gain paid-for training in specific vocational fields, and a €42m or 12.5% increase in investment in research and science, technology and innovation programmes.
Mr O’Keeffe said the IDA and Enterprise Ireland would create 27,300 new jobs next year while the reduction in air travel tax, the extension of the car scrappage scheme and investment in the retrofit programme for upgrading insulation and energy efficiency in homes and businesses would help provide additional employment.
He could not say how many jobs were expected to be lost next year but he insisted the signs were good for job creation, particularly in the indigenous export market which he expects to grow by 5%.
“It’s extraordinary the perception that is out there of Ireland, of the skilled workforce available and particularly of the 12.5% corporation tax which is still a very important feature.”
He said the 7% average drop in labour costs was also an attraction. Costs are to reduce further when the €1 reduction in the hourly minimum wage comes into effect. Labour Affairs Minister Dara Calleary said he expected the change would take effect next month.
- Corporation Tax remains at 12.5%
- BES tax reliefs to apply to investments up to €10m (up from €2m)
- New 20% rate of Relevant Contracts Tax for tax compliant subcontractors (down from 35%)
- 15,000 new ‘activation’ places to provide vocational training for unemployed
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