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Irish 2022 Finance Bill Changes for Pillar Two

The Irish Finance Bill 2022 was published on 18 October 2022 and includes some key changes to the Irish corporation tax system to take account of the Pillar Two rules. 

Knowledge Development Box
 
Section 33 of the Finance Bill provides for amendments to the Knowledge Development Box (KDB).
 
As well as extending the KDB for a further four years (until January 1, 2027), it provides (subject to a Ministerial Commencement Order) for a new effective rate of 10% for profits within scope of the KDB. Currently, the KDB provides for a 50% reduction of qualifying income, resulting in an effective tax rate of 6.25%.
 
The Finance Bill reduces the reduction from 50% to 20% which increases the KDB effective tax rate to 10%. The aim of this is less to do with the GloBE rules in Pillar Two and more to do with the subject-to-tax rule

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