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Consultation on taxation of business interest

The Government has launched a public consultation on how the deductibility of interest by businesses is treated in Ireland’s tax system.

The Minister for Finance Jack Chambers said that the consultation would form part of a wider review of the interest regime.

Describing the taxation and deductibility of interest as “a complex area”, he said that the process aimed to ensure that the system remained resilient, supported competitiveness, protected the tax base, and aligned with international commitments.

‘Gateway tests’

Irish tax legislation currently includes a number of provisions allowing for the deductibility of an interest expense by a business.

The system includes ‘gateway tests’ that determine if there is an entitlement to relief for interest – generally based on the purpose of the borrowing.

Some limits on relief may also apply, in order to tackle potential tax avoidance.

The consultation period will run until Thursday 30 January 2025.