High-earner tax breaks in drive for 10,000 new IFSC jobs
THE Government is considering re-introducing measures that would allow high-earning Irish Financial Services Centre (IFSC) executives to keep vast swathes of their income away from the Irish taxman.
The commitment to explore "changes to the current incentive regime" for attracting highly skilled international jobs is included in the new IFSC strategy document unveiled by Taoiseach Enda Kenny last week.
Ireland operated a generous remittance basis scheme until 2005, allowing expats working for foreign companies to only pay Irish tax on the portions of their salary that they actually spent in Ireland.
The relief, which allowed people to bring large savings into Ireland and offshore all of their earnings, was abolished in January 2006 and replaced with a far more restrictive scheme.
The current version, described as "extremely complex", forces expats to pay tax on the first €100,000 of their earnings but allows them to allocate up to half their earnings above €100,000 outside Ireland.
"We're not competitive in this area and it's something we have to look at," said John Bradley, who heads up KPMG's International Executive Services. "Other countries have more attractive regimes."
The IFSC strategy, unveiled as part of the Government's plan to create 10,000 financial jobs in the next five years, notes that other countries "aggressively incentivise the attraction of these [finance] skills, through remittance bases and other measures.
"In light of this competition, changes to the current incentive regime will be considered in order to ensure Ireland's attractiveness," the document adds.
The Taoiseach's press office failed to respond to queries but a spokesman for the Department of Finance said the Budget would be the appropriate time to consider such matters.
Sources stressed that it would be "politically very difficult" to reduce taxes for the wealthy, adding that any new scheme would be likely to be significantly more restrictive than what was in place before 2005.
Mr Bradley said he was "pleased" to see that the Government was considering new incentives since personal tax rates were an important factor for companies considering where to base senior staff.
He added that higher personal taxes were often borne by companies rather then staff.