KPMG Urges Ireland to Rethink Tax Strategy, Cut Capital Taxes to 20%
KPMG urges Ireland to rethink its tax strategy in this year’s budget, recommending decisive action to boost competitiveness. Key proposals include cutting capital gains and acquisitions tax to 20%, increasing the marginal income tax entry point, and simplifying the tax code. These measures aim to support investment, innovation, and a broader economic base.
KPMG has urged Ireland to rethink its tax strategy in this year’s budget, calling for decisive action to strengthen competitiveness. In its pre-budget submission to Tánaiste and Minister for Finance Simon Harris, the firm recommended increasing the entry point to the marginal income tax rate and implementing other measures.
Orla Gavin, head of tax at KPMG in Ireland, stated that the country faces profound changes in the global tax and economic landscape. She emphasized maintaining a clear, stable, and competitive tax policy framework to support investment, innovation, and employment, noting that while the multinational sector is central, a resilient economy requires a broader base, making the domestic enterprise sector critical for growth and fiscal stability.
Key recommendations include reducing capital gains tax and capital acquisitions tax rates to 20 percent. Gavin argued that high capital taxes discourage risk-taking and restrict fund recycling into growing Irish businesses. KPMG also suggested capping PRSI income at €75,000 for employees and €100,000 for employers, simplifying Ireland’s tax code, streamlining corporation tax and VAT returns, and introducing a simple, tax-efficient savings and investment account.
Additionally, KPMG called for enhancing the research and development tax credit, reforming the knowledge development box, and introducing a green transition tax incentive with a 50 percent R&D tax credit for green technology. On housing, the firm recommended targeted tax incentives to accelerate the conversion of obsolete buildings into residential accommodation.