The tax system is weighing down businesses with regulation and administration like never before. Ten years of international tax reform has resulted in a tsunami of additional tax rules and disclosures. A fear of tax avoidance has resulted in more restrictive income and capital tax reliefs.
Over the years there has been a tendency to layer legislation on legislation, without ever stopping to modernise the tax code or retire old provisions. Corporate tax returns have almost doubled in length in a decade. Soon a whole new set of returns for the 15 per cent minimum tax rule will be introduced. The complexity and risk of getting taxes wrong is daunting. More worrying is that this undermines Ireland’s competitiveness. Businesses can locate elsewhere if they find Ireland is too complex and costly to comply with regulations.
In addition, complexity around conditions means that SMEs are effectively prohibited from accessing our showcase reliefs such as the Research & Development credit and the Employment Investment Incentive Scheme (a relief which encourages individuals to provide equity-based finance to trading companies). Increasing the value of these two regimes, as was announced in Budget 2025, is not much good if there is too much red tape to make them accessible for the target audience. These burdens are echoed in PwC’s 2024 Irish CEO survey, where 88 per cent of business leaders said that the regulatory burden is a challenge.
Government needs to invest time and expertise in making the tax code simpler across all heads of tax and all business profiles. The focus needs to be pro-growth, rather than anti-avoidance.
Tax simplification is already trending as part of a global “decluttering” movement, with efforts already under way in the EU to reduce the burdens on business associated with reporting and compliance by 25 per cent. Ireland could be a front-runner in this space.
We urge the next government to introduce a tax simplification roadmap, clearly setting a plan over a number of years. It will take time to achieve, and business must be cognisant of that fact. However, if it is to deliver real outcomes, it should be an all-hands-on-deck approach
Simplification cannot happen without political and interdepartmental agreement. The Minister for Finance – whoever he or she may be following the general election – needs to grasp the nettle and set a simplification agenda for Irish tax. This should be the Department’s primary tax focus for the next five years. Revenue has a key role to play in this, too, and will need to be motivated to deliver a user-friendly set of rules.
The Department of Finance’s announcement of a participation exemption for foreign dividends (a relief where companies can receive dividends tax free from other jurisdictions) from next year is a significant step towards simplifying Ireland’s corporate tax system. However, the qualifying conditions are still too complicated.
Also welcome is the recently launched public consultation on the tax treatment of interest in Ireland. However, this is at a very early stage and is likely to take years before the benefits of cleaning up the multilayered interest rules will bear fruit.
Other areas for simplification that desperately need attention include: real-time reporting for PAYE; the Research & Development credit, which is cumbersome to claim – especially for private businesses; and the Knowledge Development Box (an intellectual property regime providing corporate tax relief).
This week’s budget was an ideal opportunity to do something – it was a missed opportunity. We urge the next government to introduce a tax simplification roadmap, clearly setting a plan over a number of years. It will take time to achieve, and business must be cognisant of that fact. However, if it is to deliver real outcomes, it should be an all-hands-on-deck approach with buy-in from Revenue and the Department of Finance, and involve the technology and other stakeholders.
[ Taxing times as reform remains high on the global agendaOpens in new window ]
Now is the ideal time to undertake this, as we have a short lull before the next wave of global tax reforms will need to be implemented, and so we can focus on a root and branch review of our tax system. We will regret it in ten years’ time if this opportunity is wasted.
Companies can also take action today to simplify their approach to tax, particularly with more tax disclosures on the way. They need to invest in their technology and data strategies, transform how they work and prepare to adopt a digital future.
Smart technologies such as GenAI can help sift through reams of data more quickly and efficiently to give the correct information to meet multiple tax-filing obligations. AI and GenAI can also help identify insights for decision making like never before, but companies need to invest in their data and data management strategies.
[ GenAI is already changing business – and it’s only the beginningOpens in new window ]
According to PwC’s 2024 GenAI Business Leaders Survey, there is significant AI and GenAI innovation and activity afoot to enable a surge in AI adoption in the years ahead. For example, 86 per cent of respondents confirmed that they are either at the early stages of exploration, testing or partial implementation stages of AI adoption, up from 54 per cent last year – an indication of the value seen by business leaders.
Ireland needs a business environment that is attractive and competitive, and having a simpler tax system that is easy to navigate is a critical component.
Paraic Burke is head of tax at PwC Ireland