Factbox - Key tax measures in Ireland's 2012 budget

DUBLIN Tue Dec 6, 2011 9:09pm GMT

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DUBLIN (Reuters) - Ireland cut its growth forecast for next year and fleshed out 1 billion euros worth of fresh tax measures on Tuesday under the shadow of a euro zone debt crisis that threatens to derail its fragile recovery and force even more austerity on its recession-weary people.

HEADLINE FIGURES

- 1.6 billion euros (1.38 billion pounds) of the 3.8 billion euros of fiscal consolidation is on the taxation side after 2.2 billion worth of spending cuts were spelled out on Monday.

- The government hopes to raise 670 million euros from a two percentage point rise in the top rate of sales tax with 330 million generated from other indirect taxes and 600 million from tax measured carried over from budgetary measures implemented this year.

KEY MEASURES

- Raise in highest VAT rate in 2012 by two percentage points to 23 percent.

- Government to maintain 12.5 percent corporate tax rate

- No change to income tax rates, bands or credits.

- Scrapped proposal to end "upward-only rent review" clauses in commercial leases.

CONSUMER GOODS

- Excise duty on a packet of cigarettes will rise by 25 cents from midnight to raise 41 million euros next year.

- No increase excise on alcohol.

PERSONAL TAXES

- Exemption level for the Universal Social Charge will be raised to benefit nearly 330,000 people lower paid, part-time workers.

- A 100 euros annual household charge will be imposed, but waived for those on mortgage interest supplement and for those residing in certain categories of unfinished housing estates.

- Abolishing the "citizenship" condition for payment of the Domicile Levy so as to ensure that "tax exiles" cannot avoid it by renouncing their citizenship.

- Removing the existing tax exemption for the first 36 days of Illness Benefit and Occupational Injury Benefit and broaden Pay Related Social Insurance to cover rental, investment and other forms of income from 2013.

INVESTMENT

- The rate of capital acquisitions tax will be increased to 30 percent from 25 percent.

- Capital Gains Tax will also be hiked to 30 percent.

- The Deposit Interest Retention tax on interest income is to rise to 30 percent from 27 percent.

- Foreign Earnings Deduction will apply where an individual spends 60 days a year developing markets for Ireland in Brazil, Russia, India, China and South Africa.

SMEs

- The first 100,000 euros of R&D expenditure of all companies will be allowed for a tax credit.

- The corporate tax exemption for new start up companies is being extended for the next three years.

AGRICULTURE

- Modification of retirement relief from Capital Gains Tax to encourage the transfer of farms and businesses before the current owners reach the age of 66.

- 50 per cent stock relief for all registered farm partnerships and a 100 per cent stock relief for certain young trained farmers forming such partnerships.

PROPERTY

- The Stamp Duty rate for commercial property transfers will be reduced from the current top rate of 6 percent to a flat rate of 2 percent. The current stamp duty arrangements for residential property will continue to apply.

- An increase in the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage between 2004 and 2008 at the cost of 52 million euros.

- Increase in mortgage interest relief for those who buy residential properties in 2012.

- A property relief surcharge of 5 percent will be imposed on investors with an annual gross income over 100,000 euros.

OTHER MEASURES

- An increase in the carbon tax on petrol and auto-diesel from to 20 euros per tonne from 15 euros per tonne. There is to be no carbon tax for solid fuels.

- An increase in Motor Tax effective from January 1, 2012.

- Legislation is to be introduced to facilitate the extension of betting duty to remote betting and the introduction of betting intermediaries duty to cover betting exchanges. The new regime will commence from Q2, 2012.

(Compiled by Padraic Halpin and Conor Humphries)

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