Ireland's Smart Budget: Cutting Taxes to Attract Investment

Ireland's latest budget focuses on reducing business taxes and enhancing foreign investment, leveraging its strong public finances. Despite a reduction in expansion pace, ministers aim to strengthen the economy's resilience. Changes include VAT and tax cuts for businesses, impacting income taxes and boosting public services.

Ireland unveiled its latest budget on Tuesday, aiming to trim business taxes and boost foreign investment by leveraging its robust public finances. With a thriving corporate tax boom, Dublin has the latitude to simultaneously cut taxes and increase spending, but ministers call for fiscal discipline for future budgets.

The budget outlines a 6.2% hike in day-to-day spending by 2026 and plans to strengthen public services, with a focus on countering U.S. trade policy exposure. The government has resisted across-the-board tax indexation, opting instead for VAT and tax reductions for businesses like food services and apartment construction.

Highlighting a key strategic move, the tax credit for research and development has been increased to 35% from 30%, aligning with foreign multinational representatives' calls. The government aims to attract new investment projects, while a tax cut on investment funds to 38% from 41% seeks to simplify the retail investment framework next year.

(With inputs from agencies.)