Budget 2027 contained limited announcements for international business. The measures provide targeted improvements, but the wider challenge remains: maintaining Ireland’s attractiveness as global tax rules become more complex and established competitive advantages narrow.
Key measures
The Minister for Finance reaffirmed the Government’s commitment to a corporation tax regime that remains “competitive, supports investment and is aligned with international best practice”.
It’s debatable whether the Budget delivered on that promise; it’s a case of small incremental improvements rather than any gamechanger. The principal announcements for international business were:
Taken together, these are useful but modest changes. They do not materially recast Ireland’s international tax offering, and much of the practical detail will depend on the Finance Bill.
KPMG insights – our view
A stable base, but a changing environment
If it ain’t broke, don’t fix it? Ireland’s tax regime has supported inward investment over many years. Its established strengths, including the 12.5% corporation tax rate and a reputation for stability and predictability, remain important.
However, the Minister also acknowledged a period of major global uncertainty, in which a small open economy is particularly exposed. Global tax reform continues to advance, with the OECD Pillar Two Side-by-Side package and last year’s US tax reforms reshaping how multinational groups may be taxed from 2026 onwards.
The Minister referred to Ireland as an “island of economic and political stability in a world of increasing volatility”. We should be bolder in taking the initiative.
Innovation and investment
Innovation is central to long-term economic resilience, and Ireland has an opportunity to strengthen its position as a location for innovative activity. The R&D tax credit is an effective part of the existing regime, while the extension of the Knowledge Development Box provides continuity.
The announced changes are welcome, but they are incremental. We continue to promote the introduction of a Digital Transformation Tax Incentive to support business investment in digital capability, productivity and resilience, alongside measures that could push Ireland to the forefront as the home of innovation and promote the growth of green technologies.
Simplification of tax administration in Ireland
International tax reform now sits alongside an already detailed domestic tax system. This has increased complexity and the compliance burden for businesses.
As Pillar Two develops, the 12.5% corporation tax rate is also less of a differentiator than it once was. In that environment, simplicity, certainty and efficient administration are essential to improving Ireland and the EU’s international competitiveness.
Ireland should continue to pursue practical measures that reduce complexity and the cost of compliance. The foreign branch exemption should also be advanced as quickly as possible. These steps would help reduce the complexity and compliance burden that will reduce the cost of doing business and boost Ireland’s attractiveness.
International tax developments
The confirmation that the OECD Side-by-Side package will be implemented in Irish law is welcome. However, the underlying Pillar Two regime remains complex, particularly as many groups approach a second filing deadline.
Ireland should advocate strongly for further simplification internationally and use available domestic flexibility to ease the administrative burden where possible. The impact on Irish competitiveness, both through tax rates and the wider cost of doing business, should remain front of mind as the rules are reviewed and implemented.
The US introduced a new range of tax measures last year through the One Big Beautiful Bill Act. The impact of these changes also reduces Ireland’s competitiveness for US multinational enterprises in certain cases; these changes may narrow or eliminate the difference between US tax and foreign tax on profits from overseas activities.
Ireland’s position and the next steps
Ireland enters this period from a position of strength, reflected in continued growth in corporation tax receipts. The concentration of those receipts, and the associated risk, are well recognised. Widening the tax base by continuing to attract new investment should therefore remain a core Government priority. That requires more than preserving existing strengths.
We would like to see the Government take bolder steps to improve our tax regime and our attractiveness. This calls for a sharper focus on innovation, simpler administration and measures that help businesses attract and retain skilled people.
Further enhancements to the Special Assignee Relief Programme and targeted support to attract international researchers should form part of that discussion.
Budget 2027 offers continuity and some worthwhile refinements, but it stops short of a step-change. Bolder action on innovation, simplification and talent would help Ireland protect its international tax competitiveness and broaden the investment base for the years ahead.
Get in touch
The measures unveiled in Budget 2027 will have far-reaching implications for businesses across Ireland. If you have any enquiries, comments, or wish to explore further, we are here to assist.
Contact Cillein Barry of our Tax team today.
