An independent evaluation of the most significant changes for businesses in the 2020 Budget has endorsed reforms of tax relief for international employees here, saying the benefits boost the economy.
The extension of allowances for the Special Assignee Relief Programme (SARP), which allows people posted to Ireland to pay substantially lower rates of income tax, was criticised by trade unions and social justice campaigners, at a time when the Budget extended small gains to the lowest-paid workers.
A cap of €1m will be imposed on all beneficiaries, and not just new assignees.
In an analysis of the impact of SARP, consultancy Indecon said that the programme brought more benefits than it cost taxpayers, even though its cost had surged to €28.1m by 2017, from €0.1m in 2012, and the number of claimants has increased 100-fold to 1,084.
The extension of the benefits was supported by IDA Ireland, which backs foreign investment here, and business group Ibec.
Indecon calculated that total economic benefits were €67.2m, versus costs of €28.1m, although it did note that 232 people involved in the wholesale and retail trade, and repair of motor vehicles and motorcycles, claimed the benefits at a cost of €5.1m to the Exchequer.
An extension of the foreign earnings allowances was also viewed as positive, as it added 0.5pc to the value of exports to the countries for which it operated, Indecon said.
The study said that entrepreneur tax relief was also justified and recommended the lifetime cap of €1m should rise to €12m for entrepreneurs who reinvest in a new firm.
It calculated the cost to the Exchequer from the measure was €81.8m.
Among other changes, the Budget extended the range of potential beneficiaries from a key employee retention share scheme to part-time workers. Under the Employment and Investment Incentive scheme, full income tax relief will be given in the year in which an investment is made, and the annual investment limit was raised to €250,000 from €150,000, and to €500,000 for a 10- year minimum investment.
Real estate investment trusts (Reits) found themselves subject to dividend withholding tax on the proceeds of property disposals.
Rules now stipulate that expenses above amounts used for the purposes of the Reit business are charged to tax in the hands of the Reit.