Budget 2020 must address tax policy and tax administration issues for small firms

October 03, 2019

The Small Firms Association is urging Government to address tax policy and tax administration issues in Budget 2020. The call comes as the group launches their latest tax policy document, “A Supportive Tax Environment for Small Firms”, in collaboration with PKF O’Connor, Leddy & Holmes.
Sven Spollen-Behrens, SFA Director, said: “Tax policy and tax administration can have a very significant impact on Irish small and indigenous businesses such as: investment, expansion, and attracting new talent. The administration and cost of operating the tax system can also be very onerous on small businesses. We must ensure that in Budget 2020, the interests of smaller firms are given due attention by bringing about changes to our current tax policy under three pillars investment, employment and administration.” 

Tax Partner Catherine McGovern, PKF O’Connor, Leddy & Holmes said: “Based on our experience with clients, we believe immediate changes to Ireland’s tax policy and tax administration are required in Budget 2020, in order to assist small firms and encourage enterprise. “Small firms are the backbone of the Irish economy, supporting them helps create and sustain jobs throughout the country. Given rolling Brexit uncertainty, we hope the Minister for Finance recognises their importance by bringing these changes forward in the Budget, and, does not further increase the cost burden on small firms” concluded Spollen-Behrens.

Key recommendations:

1. Reduce the current CGT rate of 33% immediately to 28% and ultimately to 20%.
2. Increase the lifetime limit of €1m for Entrepreneur Relief immediately to at least €5m and in the longer term to €15m.
3. Introduce investor relief at a 10% CGT rate up to lifetime taxable gains of €1m.
4. Establish an R&D centre of excellence in Revenue whereby the R&D Tax Credit claims could be reviewed more efficiently.
5. Increase EIIS relief from €150,000 to at least €500,000 per annum. Allow the EIIS tax relief to be claimed in its entirety in year 1 at 40% and apply the relief to PRSI and USC also.
6. Review the KEEP legislation to make it more widely available and attractive to companies and employees, to ensure that it satisfies the purpose for which it was created to provide tax efficient share options to employees. 
7. Make the payment of professional subscriptions by employers’ tax exempt.
8. Create a new talent regime for small firms, so that they can attract talented and skilled employees from outside Ireland to enable them to grow their business.
9. Issue further Revenue guidance to clarify the designation of an individual as an employee or self-employed for tax purposes.
10. Reduce the interest rate for late payment of tax and amend fixed penalties to be more proportionate to the level of the tax liability.

SFA A supportive tax environment for small firms 2019 pdf | 1339.2 kb