While Budget 2026 featured positive progress in areas such as the R&D tax credit and a reduction in IUT, a perceived lack of urgency in dealing with pressing matters, illustrated by Budget day announcements of new action plans, implementation plans and a compass, instead of actual tax reforms, has led to frustration for stakeholders. The Finance Bill, published on October 16th, largely reflects the announced changes, but also includes a welcome broadening of the DWT exemption to ILPs - with the panel, in their pre-Finance Bill commentaries, describing the initial omission as ‘disappointing’ and a ‘notable gap’ as well as a broadening of qualifying expenditure under the R&D regime.
Writing in the roundtable Forvis Mazars’ Joe Walsh says there is ‘deep disappointment’ in Budget 2026 due to ‘a lack of meaningful progress on long-anticipated reforms, particularly in the tax treatment of interest, and the deferral of key strategic initiatives to a later phase that won’t be implemented until at least 2027...Following extensive consultations earlier in the year, industry stakeholders had hoped Budget 2026 would deliver concrete legislative updates to modernise and simplify Ireland’s interest deductibility regime.’ He adds that the delay has frustrated many in the industry who see the current framework as outdated and a negative for inhibits Ireland’s competitiveness.
BDO’s Angela Fleming welcomes the reduction in IUT but, like a number of her fellow contributors, expresses disappointment that the rate has not been reduced to come in line with CGT. Meanwhile, hopes of the 8-year ‘deemed disposal’ rule being abolished soon have faded but Fleming is keeping her fingers crossed for the faint possibility it may still make it into Finance Bill 2025 as it works its way through the Houses of the Oireachtas. In her article Fleming criticises the slow pace of reform writing, ‘There were almost more proposals for future tax changes than immediate ones in this year’s Budget speech’ and adds that while consultations are required ahead of significant tax changes they are leading to ‘drags’ on implementation timelines and delays in the introduction of much needed changes and despite the acknowledged need for Ireland to ‘pivot with purpose’ to meet global challenges and create the right conditions for businesses to thrive she writes, ‘This budget feels less like a pivot and more like a slow turning.’
Disappointment was also expressed with the lack of any changes aimed at cutting tax complexity in the Budget. PwC’s Colin Farrell writes, ‘no initiatives have been introduced to simplify tax administration, leaving existing complexities in place. A streamlined tax system could significantly reduce the administrative burden on businesses, thereby enhancing competitiveness. In particular, the Form CT1 has more than doubled in length in the last decade.’
While the enhancement of Ireland’s R&D regime is widely welcomed, further improvements are called for by Farrell, who writes, ‘Ireland’s competitive position is eroding as peers offer richer, more flexible regimes.’ Amongst the issues constraining Ireland’s R&D efforts are a narrow definition of qualifying costs and activities and the 15% cap on subcontracted R&D.
On the same topic, Forvis Mazars John Burke writes, ‘Simplifying the claims process, expanding qualifying definitions, and introducing targeted incentives for green and digital innovation will be key’ for Ireland to remain competitive in the R&D game.
While McCann FitzGerald’s Deirdre Barnicle says despite the announced R&D review she hopes the Finance Bill would already ‘include a broader definition of qualifying expenditure, as well as a reduction in the cap for outsourced R&D, to better recognise the commercial realities of modern R&D investment.’
A notable gap that Walkers’ Padhraic Mulpeter identifies is the continuing lack of a DWT exemption for ILPs. Writing prior to the publication of the Finance Bill (which proposes to broaden the exemption to include ILPs) he said the situation ‘is undermining the attractiveness of the ILP regime and this was recognised in the Funds 2030 Report.’
Away from Budget matters, PwC’s Johnny Wickham analyses the impact that AI is having on the tax function and specifically looks at the increased use of AI by tax authorities and what the tax function needs to do keep up.
Forvis Mazars’ Claire Healy, writing on recommendations to streamline the EU tax system says, ‘Simplifying the tax systems across all Member States, or at least bringing clarity and certainty on cross border matters, would be a significant improvement. While the EU guarantees the free movement of goods, capital and individuals, the complexity of the tax rules and systems creates informal barriers.’
On a related topic PwC’s Avril McDowell updates on the EU’s efforts to improve Europe’s fragmented VAT landscape, including ViDA and the EU VAT SME scheme.
This article appeared in the October 2025 edition of the Irish Tax Monitor.
