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The Minister for Finance, Michael Noonan T.D., today (13

February 2013) published the

and

. Details on both Bills are set out in the Notes to Editors below.

Commenting on the publication of the Finance Bill Minister Noonan stated: "In Budget 2013 I announced a range of measure to support job creation in the domestic economy including a ten-point tax reform plan for SME’s. In addition, the Revenue raising measures were designed to limit the impact of the necessary consolidation on jobs and growth.

Finance Bill 2013 implements these taxation measures and also includes a number of new measures to support SME’s. While we have seen significant progress since Budget day on a number of key issues there is no doubt that the SME sector will be the driver of the economic recovery across the country. This Government is committed to supporting this key sector and each of the measures included in Finance Bill 2013 are designed to help this critical sector to trade, to grow into new products and markets, to sustain existing and to create new jobs.

To support our thriving agri-food sector and building upon the supports for this sector announced last year I have introduced a Capital Gains Tax relief for farm restructuring. This relief aims to improve farm efficiency and to help achieve the targets set out in the Food Harvest 2020 Strategy

The second bill, the Finance (Local Property Tax) (Amendment) Bill 2013 introduces a small number of changes to the Local Property Tax taking on board a number of issues raised by Deputies during the debate on the Property Tax in the Oireachtas "

Note to Editors

SME 10 Point Plan Plus 2

10 Point Plan

The ten-point tax reform plan was introduced announced in the Budget. This plan includes measures that will make a real difference for the SME sectors such as reforming the three-year corporation tax relief for start-up companies, increasing the cash receipts basis threshold for VAT, amending the close company surcharge to improve cash flow for SMEs and extending the Foreign Earnings Deduction for work-related travel to certain additional countries.

Plus 2

Amendment of the ‘Key Employee’ provision of the R&D tax credit regime by reducing - from 75% to 50% - the proportion of time that such an employee must spend solely on R&D activities, in order to qualify for the credit. This should assist small and medium enterprises to avail of the provision

EII Scheme is being amended to permit the operating or managing of hotels, guest houses, self-catering accommodation or comparable establishments to qualify for the incentives

Finance Bill 2013

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It provides for the changes to Universal Social Charge (USC)announced in Budget 2013. Standard rates of USC will apply to those aged 70 years of age and over and medical card holders (both PAYE/and self-employed income earners) who have income in excess of €60,000 per annum. The current lower 4 percent rate of USC which applies until the end of 2014 will continue in place for all other relevant income earners.

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The Bill makes provision for the Budget day announcement that maternity benefit paymentswill be treated as taxable income with effect from 1 July 2013. As is the case with all social welfare payments, maternity benefit will continue to be exempt from the USC. This measure will correct an anomaly so that women on maternity benefit will pay the same level of income tax as when they are working. In addition, in order to ensure a fair and consistent approach, the Bill also provides that Adoptive Benefit and Health and Safety Benefit payments will be treated as taxable income with effect from 1 July 2013.

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The Bill provides for the changes to Top Slicing Reliefannounced in Budget 2013. Top slicing relief will no longer be available from 1 January 2013 on ex-gratia lump sums made to employees and office holders in respect of either redundancy or termination of employment, where the non-statutory element of the payment is €200,000 or over.

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As a result of a recent public consultation and the report of the Forum on Philanthropy and Fundraising, the Bill contains simplification measures for the scheme of

tax relief for donations to charities and approved bodies.

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The standard Deposit Interest Retention Tax Raterate has been increased by 3 percentage points to 33%, and the rate for certain longer term savings products has been increased to 36%. The increased rate applies to payments, including deemed payments, made from 1 January 2013.

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In line with the increased DIRT rates, the rates of exit tax applying to life assurance policiesand investment funds have also been increased by 3 percentage points to 33% and 36% from 1 January 2013, with similar increases applying to the tax rate on other investment products.

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Last year the Minister approved the undertaking of a Review of the current Film Relief Tax Incentive Scheme,the results of which were published at Budget time. Following this review, the Minister announced in the Budget certain changes to Section 481 (Film Relief) to take effect from 2016, which is when the current scheme ends and provision is now being made in this Bill for these changes.

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The Bill provides for the measure announced in Budget 2013 that to enable farm restructuring, Capital Gains Tax reliefwill be available where the proceeds of a sale of farm land are reinvested for restructuring purposes. The relief will also apply to farm land swaps subject to certification by Teagasc for all transactions seeking relief. The commencement of the relief is subject to receipt of EU State Aid approval.

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The Bill gives effect to the measure announced in Budget 2013 that individuals will be allowed a once-off option to withdraw up to 30% of the value of funded Additional Voluntary Contributions made to supplement retirement benefits. Withdrawals will be liable to tax at an individual’s marginal rate. The option to withdraw will be available for 3 years from the passing of the Bill.

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The Bill will also provide for the introduction of Real Estate Investment Trusts (REITs)as announced on Budget Day. REITs are an internationally recognised format for collective investment in rental property. It is hoped that REITs will facilitate the attraction of foreign investment capital to the Irish property market, helping to stabilise that market, and also releasing bank financing from the property market for use by other sectors of the economy. REITs also provide investors with an alternative lower-cost, lower-risk method for property investment.

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As regards the aviation sector, the Bill makes provision for an amendment to the definition of "industrial building" such that industrial building allowances will apply to hangars, tear down pads, parking and ancillary facilities. In addition, provision is made for an accelerated capital allowance scheme, over seven years in relation to construction or refurbishment of certain buildings or structures used in connection with the maintenance, repair or overhaul of commercial aircraft, to operate for a period of 5 years from commencement of the scheme.

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The Minister announced in his Budget speech that he wanted to examine proposals for targeted tax incentives in already indentified regeneration areas. The Bill contains some provisions to allow for a pilot scheme in certain defined areas, the Living Cityinitiative. Due to the requirement to obtain EU State Aid approval, this provision will be subject to a Commencement Order.

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The Finance Bill extends the general 25% rate and the 100% young trained farmer rate of stock relief and the young trained farmer relief from Stamp Duty on transfers of agricultural land to 31 December 2015. The Bill also extends the definition of registered farm partnerships for the purposes of the enhanced 50% stock relief (100% for certain young trained farmers) to other registered farm partnerships such as beef or sheep farm partnerships. This 50% rate of relief already runs until 31 December 2015. Both the 50% and the 100% rate of reliefs are subject to State Aid clearance from the EU Commission.

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The Bill provides for the Budget increase of 10 cent (including VAT) on the excise dutyon a packet of 20 cigarettes, with a pro-rata increase on other tobacco products, and an additional increase of 50c per 25g packet of roll-your-own tobacco. The additional revenue expected to be raised is €25 million. The Bill provides for the Budget increase of 10c (including VAT) on a pint of beer or cider and a standard measure of spirits, and €1 increase on a 75cl bottle of wine. The additional revenue expected to be raised is €180 million.

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Finance Bill 2013 provides for the re-structuring of the VRTrates and bands. The re-structuring follows a consultation process with the industry and other stakeholders. The additional revenue expected to be raised is €50 million. In addition, the VRT relief which is available for the purchase of hybrid and flexible fuel vehicles, which was due to expire on 31 December, 2012, has been extended for a further 12 months.

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The Bill also gives effect to the auto-diesel excise duty relief for licensed and tax compliant hauliersthat the Minister announced in his Budget speech. Following consideration the relief will be extended to the licensed passenger transport sector. The relief will take effect from 1 July 2013 and the amount of relief will be linked to the price of auto-diesel. The maximum amount of relief will be 7.5 cents per litre.

The Minister highlighted a number of the other new measures in the Finance Bill:

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The Bill provides for the abolition of Foreign Service Reliefprovided for in section 201 of Taxes Consolidation Act 1997, in respect of ex-gratia payments made on retirement or removal from office. The relief is being abolished to prevent a situation whereby employees in multinational corporations, who had no "presence" within the Irish income tax system, could be transferred to Ireland for short periods to finish careers and be given significant "golden handshakes" which, based on foreign service relief, could be received almost free of tax in this country.

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The legislation governing Employee Benefit Trustsis being amended to prevent abuse. Payments, including loans, to any employee out of a trust that is provided or funded by an employer will, in future, be considered income within the charge to Income Tax and the USC. If the payment made by the trust to the individual is a loan that is repaid, the Income Tax and USC paid on the initial payment will be refunded (subject to certain safeguards). In order to prevent any genuine trusts being caught by the changes introduced, the provision will not apply to schemes that are approved by the Revenue Commissioners such as Approved Profit Sharing Schemes, Employee Share Ownership Trusts or Occupational Pension Schemes.

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As announced by the Minister for Health and Children in December and provided for in this Bill, an increased Health Insurance Levyapplies to all renewals and new contracts entered into from 31 March 2013. This is provided for in the Bill.

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The Bill will contain an additional measure to improve the access of small and medium enterprises to the ‘key employee’ provision of the R&D tax credit. Under the current legislation, in order to qualify for the credit, an employee must spend at least 75% of their time working on R&D. This threshold is being reduced to 50% in order to assist small and medium enterprises to avail of this provision.

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As well as being extended for a further seven years, from 2014 to 2020, as announced in the Budget, the Employment and Investment Incentive is being amended to allow the operating or managing of hotels, guesthouses and other self-catering accommodation to qualify, subject to a review after two years. The hotel sector currently employs approximately 51,000 individuals. Extension of the incentive to cover investments in this sector will help to sustain these jobs and potentially create additional employment.

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The Bill will provide for the ratification of an

International Tax Agreement between Ireland and the United States.

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To ensure that applicants for tax clearance certificatesare fully tax compliant in relation to all the main taxes and duties, Stamp Duty and Capital Acquisitions Tax will be included in both Section 1094 and Section 1095 of the Taxes Consolidation Act, 1997.

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The Mandatory Disclosureregime will be refined by deleting subsection (1C) from section 811A so as to ensure that the same "burden of proof" applies in determining whether a transaction is a tax avoidance transaction, regardless of whether a Protective Notification has been received or not. This proposal favours the taxpayer.

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In relation to electronic filing the Bill provides for a clear legislative basis for the issue of final demands via the Revenue On-Line (ROS) inbox facility to people who are registered on ROS or who are required to pay tax and file a return via ROS.

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The Bill also provides for the extension of a facility, introduced by Revenue in November 2012, for Irish-resident companies to file their financial statements electronicallywith their corporation tax returns. It is now intended to amend the Taxes Consolidation Act 1997 to include accounts information as part of the tax returns of individuals, trusts and partnerships that file under the self-assessment system.

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The Finance (Local Property Tax) (Amendment) Bill 2013 includes amendments to the Local Property Tax on foot of commitments the Minister gave in the debates in the Oireachtas, as well as a number of related items and provides for the following:

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An amendment to provide an exemption for properties affected by "pyritic heave".The details of the provision will be finalised, but it is proposed that, where a property has been certified to standards specified by the National Standards Authority of Ireland as having been affected by pyritic heave an exemption can be claimed from the Local Property Tax (LPT).

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A deferral of LPT will be permitted in circumstances where a personal representative of a deceased person’s estate is responsible for paymentof the LPT. The deferral is for up to three years to allow for administration of the estate without causing cashflow issues for personal representatives. The deferral is for a limited period so as not to provide an incentive to deliberately delay the administration of an estate to avoid the payment of LPT.

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Any increase in the chargeable value of the property arising from expenditure on modifications to accommodate a disabled personmay be disregarded. Provision is also made to enable properties of people in receipt of large court awards who spend large amounts on necessary adaptations to their property to be exempt from the Local Property Tax, provided they continue to live in that property.

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will be deemed to be valued in the lowest valuation band for the first valuation period only (2013-2016) and valued in a similar manner to other properties thereafter.

Details of the various measures are provided in the attached lists of Finance Bill and Finance (Local Property Tax) (Amendment) Bill measures. These lists are also available, along with the text of the Bill and the Explanatory Memoranda, at