The Irish Tax Institute has called on the Government to introduce sweeping reform of the research and development (R&D) tax credit in Ireland.
The institute today released its Pre-Budget 2026 Submission in which it urged the Government to focus on three key areas in the face of an increasingly "volatile" geopolitical climate.
It has called on the Government to enhance the country's attractiveness as a location in the increasingly competitive battle for FDI, create the environment for an ambitious, innovative and export-orientated SME sector and bolster safeguards for taxpayers and increase investment in the tax collection system.
The Institute stressed that reforming the R&D tax credit will be critically important for the country's continued competitiveness.
It wants to see an increase in the R&D tax credit rate, a change to the outsourcing rules to encourage more R&D investment and the expansion of the definition of qualifying R&D expenditure.
The Institute has also called for changes to the Key Employee Engagement Programme (KEEP) to address the low take-up in the scheme since its introduction in 2018, and amendments to legislation governing other share-based remuneration.
Anne Gunnell, Director of Tax Policy & Representations at the Irish Tax Institute, said that while Ireland has emerged largely unscathed from a succession of crises over the last number of years, the wholesale changes to the globalised trading order have led to an unprecedented threat to the heart of the Irish economic model.
"With an outsized share of large American multinational companies headquartered here, Ireland is uniquely vulnerable among EU member states to any escalation in US tariffs on imports," Ms Gunnell said.
She said that future-proofing the Irish economy is paramount.
"Government must take bold steps to ensure Ireland remains a compelling proposition for multinational businesses already based here and a location of choice for the next wave of investment from diverse sources across the globe," she stated.
Ms Gunnell noted that the German government's allocation of €46 billion for tax incentives to attract investment over the next four years has opened a new, challenging front in the battle for foreign investment.
"In this context, the Government cannot afford to get caught in the headlights of matters beyond its control. Nothing should distract it from a laser-like focus on competitiveness," she said.
She also said that it was critically important that the Government prioritised the domestic economy.
"Inward investment will always be essential to the success of a small open economy but broadening the productive base by investing in the domestic sector must be awarded the same priority," she added.
