07/12/2011

Stamp Duty Fall Welcomed By Dublin Chamber

The Dublin Chamber has hailed the Budget's reduction in commercial stamp duty, together with other measures to promote stability and demand, as a much-needed stimulus to the moribund commercial property market in Dublin.

The increase in VAT, of itself, will do little to stimulate demand, but its introduction has been well flagged and no further increases are planned.

"We look forward to seeing more detail on the support for the Financial Services industry, which is largely Dublin based, in the Finance Bill," said a Chamber statement this week.

They said that the cut in commercial stamp duty to 2% - down from 6% - will serve to increase transactions in the commercial property market and improve the availability of space for enterprise, according to Dublin Chamber of Commerce.

"Ireland's rate of stamp duty has been well above that of the UK,” said Gina Quin, Chief Executive of Dublin Chamber.

"Exchequer figures show a consistent decline in commercial stamp duty revenue, so this is the right time to take corrective action. Commercial stamp duty will account for less than €100m of tax revenue in 2011 and we expect that, with a lower rate, this revenue stream will increase in 2012."

Ms Quin said: "The Minister for Justice's decision to not proceed with the legislation to abolish upward only rent review clauses in existing business leases is a disappointment for a significant number of businesses.

"However, the period of uncertainty for all businesses is now over, allowing property values to stabilise."

Dublin Chamber also welcomed the announcement that Government intends to introduce a package of measures in the Finance Bill to support the continued success of the international financial services industry.

Ms Quin said: "Dublin Chamber looks forward to working closely with Minister Noonan on this bill to support the international financial services industry in Ireland. This sector, which is predominantly based in Dublin, employs more than 30,000 people and contributes over €1 billion in tax to the Exchequer."

The Chamber also reiterated that the approval of the Employment and Investment Incentive (a revised version of the BES or ‘Business Expansion Scheme’) by the European Commission will allow a much more broad range of companies to find investment capital.

"The commencement of the scheme is a positive step forward, especially at a time when SMEs are struggling to find the funds to sustain and grow. The EII is more flexible than the BES scheme it replaces, as it applies to companies across a wide range of sectors. It opens doors for a lot more companies, which was one of the main reforms we sought for this type of scheme back in 2010."

However, Gina Quin, Chamber Chief Executive said: "Despite calls to the contrary, the Dáil Government is proceeding to increase the rate of VAT to 23%.

"Retailers will be relying on the decision to leave income tax rates and bands untouched, the lowering of the Universal Social Charge for the lower paid, and the increase in DIRT tax on savings will put a halt to declining retail sales.

"We acknowledge, however, that we now have certainty that there will be no further VAT increases in the lifetime of this Government," she said, but added, "the Government’s continued protection of one of Ireland’s primary businesses strengths, our 12.5% corporation tax rate, is to be commended.

"Any change to the corporate taxation would have severely diminished Ireland’s ability to attract foreign direct investment and dissuaded entrepreneurs from establishing new businesses in Ireland.

"So the business community strongly supports the continued resistance by Government to compromise on this issue even under international pressure," said Ms Quin.

(BMcC)

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