Ireland must “rethink” its tax strategy in this year’s budget and take “decisive action” with measures to strengthen competitiveness, KPMG has said.The professional services firm, in its pre-budget submission to Tánaiste and Minister for Finance Simon Harris, has urged the Government to increase the entry point to the marginal income tax rate, alongside a suite of other measures.Orla Gavin, head of tax at KPMG in Ireland, said the country faces a period of “profound change” in the global tax and economic landscape.“Maintaining a clear, stable and competitive tax policy framework is essential to support investment, innovation and employment,” she said. “In our pre-Budget 2027 submission, we highlight tax measures we believe will increase competitiveness for both foreign direct investment and domestic business.“The multinational sector has been transformative for Ireland, and it will remain central. But a resilient economy needs a broader base. Strengthening the domestic enterprise sector is critical, not just for growth, but for fiscal stability.”Among its key recommendations, KPMG called on Harris to reduce the capital gains tax and capital acquisitions tax rates to 20 per cent.Gavin said high capital taxes are “locking in capital, discouraging risk taking, and restricting the recycling of funds into growing Irish businesses”.“[Reductions] would incentivise investment and enable more timely and efficient intergenerational wealth transfers,” she said.KPMG, in what it called an “increasingly challenging global tax and economic environment”, said Harris should increase the entry point to the marginal income tax rate to align with the average wage.It also called on the Minister to cap the amount of income subject to PRSI at €75,000 for employees and €100,000 for employers.Elsewhere, it said Harris should “simplify” Ireland’s tax code and filing obligations, progress reform of the tax regime for interest, streamline corporation tax and VAT returns, and move towards a “territorial regime” for branch profits.Gavin said Ireland’s tax regime has become “overly complex, driven by layered domestic changes and international reforms”.“Corporation tax and VAT return should be streamlined, interest deductibility rules simplified, a single capital gains tax pay-and-file date introduced, and measures introduced to reduce unnecessary compliance burdens for SMEs,” she said.KPMG also called for the introduction of a “simple, tax-efficient” savings and investment account to help households achieve “inflation-beating returns” while channelling more domestic savings into “productive investment”.Furthermore, the group called for the enhancement and simplification of the research and development tax credit, and reform of the knowledge development box to “preserve its effectiveness for in-scope groups”.On the environment, it said the introduction of a “green transition tax incentive” and an increase in the research and development tax credit to 50 per cent for green technology development would be helpful.Gavin said there is a “clear opportunity” for Ireland to position itself as a “global hub for innovation”, particularly in digital transformation and green technologies.On housing, KPMG called for “targeted tax incentives” to accelerate the conversion of obsolete buildings into “much needed apartments and other residential accommodation”.