The Irish Tax Institute has warned that proposals to introduce a new eWithholding Tax (eWHT) system risks damaging Ireland’s competitiveness and has urged that further consideration be given to the scope, design, cost and economic impact of the proposal before it proceeds any further.

A major reform of withholding taxes is proposed which includes:

• abolishing the current Relevant Contracts Tax (RCT)¹ and Professional Services Withholding Tax (PSWT) rates including the 0% RCT rate²;
• extending withholding tax to the platform economy; and
• replacing existing rates with an as yet undisclosed single flat rate for corporates and Personalised Deduction Rates (PDRs) for self-employed individuals.

In submitting its formal response to the joint consultation by the Department of Finance and Revenue Commissioners on the proposal, the Institute canvassed members views via a survey in January 2026 to which 145 detailed responses were received. The Institute also consulted with member firms to ascertain views from businesses of the impact of the proposal on different sectors.

Members had concerns around the consequences of removing the 0% RCT rate on funding of critical housing and infrastructure construction projects as well as access to specialist expertise from overseas. The measure would appear to be in stark contrast to other Government measures which were introduced in Budget 2026 to boost housing supply and infrastructure delivery.

Concerns were also raised about Ireland potentially moving unilaterally ahead of international agreements by introducing an eWHT for the platform economy and the territorial scope of such a tax. Given the lack of detail provided around such a measure the Institute is recommending that the proposal be paused as uncertainty surrounding it could negatively impact Ireland’s ability to attract new investment.

The cashflow impact on Irish businesses of expanding withholding tax was also cited by members. The introduction of Personalised Deduction Rates (PDRs) for self-employed individuals would effectively accelerate income tax payments making it difficult for a self-employed taxpayer to predict their cashflow on an ongoing basis as the rate varies.

While Institute members believe that digital modernisation is needed and support proposals to do so, they also firmly believe that Revenue’s existing IT systems, which they regularly report issues with, need to be upgraded before a new system is layered on top.

Commenting Institute President Shane Wallace said, “The full details of the reform are not yet known, but as it stands, the proposed eWHT regime appears too broad, too costly, and too risky. It could undermine cashflow, harm much needed housing and infrastructure delivery, impact competitiveness and Ireland’s reputation as a business-friendly jurisdiction — without clear evidence that it would materially improve tax compliance which is already very strong in this country at over 90%,” he concluded.

¹ RCT is a withholding tax that applies to certain payments by principal contractors to subcontractors in the construction, forestry and meat-processing industries. The current rates of tax are 0%, 20% and 35%.

² https://www.revenue.ie/en/corporate/consultations-and-submissions/ewht/specified-person/rct-subcontractors/index.aspx