The Irish Tax Institute welcomes the changes to some key business tax measures announced by the Minster for Finance, Michael McGrath in today’s Budget.
Speaking today, Tom Reynolds, President of the Irish Tax Institute, said: “The Minister’s decision to increase the R&D tax credit from 25% to 30% will benefit both our domestic and multinational businesses. Small enterprises undertaking R&D will also derive significant benefit from the doubling of the first-year payment threshold from €25,000 to €50,000. This will provide improved cashflow to drive innovation in the domestic sector.”
The Institute also welcomes the incentives introduced to attract angel investment in Irish SMEs and startups. “Angel investors bring critical skills and well as finance to small businesses. This new scheme to encourage them to invest in our domestic businesses will accelerate development in our start-up sector. We look forward to seeing more detail on this new scheme in the Finance Bill,” said Mr Reynolds.
The Institute also welcomed the changes to the Employment Investment Incentive Scheme and the Film Tax Credit as well as the confirmation that the changes to the Key Employee Engagement Programme (KEEP), announced in last year’s Budget will be soon commenced following State aid approval from the European Commission.
“All of these changes, together with the income tax changes announced today, make Ireland a more attractive place to work and do business.”
However, Mr Reynolds warned that “the complexity of our tax code is damaging our competitiveness. While we welcome the acknowledgement in the Minister’s speech that the rules and requirements of our business taxes needs simplification, the Institute is calling for a plan of action to remove complexity from the tax code.
“The Minister promises engagement with stakeholders on the interest deductibility rules and the establishment of a sub-group to identify opportunities to simplify the administration of business supports. Our worry is that while all this is going on, our competitiveness is being eroded. We need Government to prioritise and resource a simplification project with a clear timetable for a move to a territorial tax system and a reform of our interest deductibility rules,” he said.
“A clear and simplified business tax code that is easy to administer and comply with would give certainty to domestic and multinational businesses and encourage the inward investment on which the Irish economy has thrived over the last 30 years.”