Technology Ireland launches Budget 2022 Submission
Technology Ireland, the Ibec group that represents the technology sector, today stated that Budget 2022 must recognise and support the technology sector as the primary engine in driving Ireland’s recovery, develop Ireland’s FDI growth model to attract and retain multinational technology companies, back entrepreneurship and support innovation and R&D, and help Ireland embrace its role in EU digital regulation, strengthen regulatory capacities and lead on digital policy issues at an EU level.
Technology Ireland Director, Una Fitzpatrick, said: “Ireland’s technology sector has played a central role in sustaining Ireland throughout the pandemic. Technology makes things better for people. That’s why Ireland must recognise the technology sector as the primary engine driving Ireland’s recovery across every aspect of our society and our economy. It is vital that every aspect of government policy is focused on clearing the way for that recovery.”
“The technology sector in Ireland has undoubtedly been one the keystones of Ireland’s economic and social growth in the past thirty years. Ireland is now the envy of many countries, but our current achievements are no guarantee of future success. There are many opportunities ahead for the Irish technology sector, but there are also threats and possible constraints on our growth. We are calling on the government to use Budget 2022 to maintain and strengthen the health of the technology ecosystem, not just with passive support but by modelling best behaviour in GovTech with regard to digital transformation.”
Please find Budget Submission detailed below:
Technology Ireland – Budget 2022 Submission
About Technology Ireland:
Technology Ireland is an Association within Ibec, which represents the ICT, Digital and Software Technology Sector. The Association is a pro-active membership organisation with over 200-member companies located throughout Ireland. We advocate on behalf of Ireland’s indigenous and foreign direct investment (FDI) technology companies to Government and policy makers.
Introduction from Technology Ireland Director, Una Fitzpatrick:
Technology Ireland believes that Budget 2022 must recognise and support the technology sector as the primary engine in driving Ireland’s recovery, develop Ireland’s FDI growth model to attract and retain multinational technology companies, back entrepreneurship and support innovation and R&D, and help Ireland embrace its role in EU digital regulation, strengthen regulatory capacities and lead on digital policy issues at an EU level
Ireland’s technology sector has played a central role in sustaining Ireland throughout the pandemic and must be recognised as the primary engine that will drive Ireland’s recovery across every aspect of our society and our economy. It is vital that every aspect of government policy is focused on clearing the way for that recovery.
The technology sector in Ireland has undoubtedly been one the keystones of Ireland’s economic and social growth in the past thirty years. Ireland is now the envy of many countries, but our current achievements are no guarantee of future success. There are many opportunities ahead for the Irish technology sector, but there are also threats and possible constraints on our growth. We are calling on the government to use Budget 2022 to maintain and strengthen the health of the technology ecosystem, not just with passive support but by modelling best behaviour in GovTech with regard to digital transformation.
Technology Ireland Recommendations for Budget 2022:
To fully utilise the technology sector’s ability to lead Ireland’s post-COVID recovery and to maintain and further develop Ireland’s position as a global digital hub, Technology Ireland recommends that government should:
1. Recognise and support the technology sector as the primary engine in driving Ireland’s recovery
The technology sector has already proved invaluable in maintaining economic growth in Ireland throughout the pandemic even as most other advanced economies experienced shrinkage. Now as we finally move into a post pandemic era Ireland is uniquely positioned to utilise its technology sector as the primary engine in driving Ireland’s recovery. This opportunity is not just limited to the economic activity of the technology sector itself but must extend to recognising the sector as a cornerstone of Ireland’s overall economic and social infrastructure, utilising technology to support and revamp those areas hardest hit by the pandemic. Supporting the technology sector is key to successfully rebooting Ireland. It is not enough for the government to passively support the technology sector. It must also actively role model behaviour that encourages best practice, particularly regarding digital transformation and procurement of cloud services. It is now almost two years since the Cruinniú GovTech report was published. Understandably the pandemic has delayed many government initiatives, but the reality is that the pandemic has highlighted the urgent need for this report to be implemented.
o Act on the Cruinniú GovTech report findings for enhanced public services and growth: Lead and invest in online Government services and the digitalisation of public service delivery for organisations and citizens. Address any administrative barriers to procurement in digital services, including Cloud.
o Invest in skills development: Support the priority areas identified in the 3rd ICT Skills Action Plan to increase the number of places available in higher education and to provide alternative pathways into the technology sector. Allocate €20m from the National Training Fund to launch a dedicated digital education innovation funding call, to enhance digital education capacity in the tertiary education sector.
o Provide additional funding to Skillnets: Skillnets are a crucial part of the countries training infrastructure, linking employees and employers.
o Implement a sustainable long-term funding model for higher education: There must be a sustainable model across core, capital and recurrent funding to preserve the success and quality of Ireland’s education offering: An additional €100m in core funding will ensure Ireland’s HE system remains high quality, delivering programmes that enhance the graduate pipeline for Irish industry and support an engaging student experience.
o Ensure adequate resourcing of visa and work permit applications: Resourcing of work permit applications must be restored to at least pre-covid levels. Delays or impediments to bringing in key skilled staff from abroad must be eliminated. It is essential that there is no delay in processing permits and visas especially for trusted partner companies.
2. Develop Ireland’s FDI growth model to attract and retain multinational technology companies
As well as access to talent and skills, Ireland’s corporate tax regime has played a key part in attracting FDI. However, the underpinnings of our FDI model are likely to change in the coming years meaning that we will have to work harder as a country to ensure we remain attractive for outside investment.
o Maximise our tax competitiveness within any new dispensation: It is crucial, that while it may be too early to address these issues definitively there must be an urgent reassessment of Ireland tax attractiveness under any new OECD regime. This should include consideration of moving to a participation exemption for dividends/territorial tax regime, merging the 25% non-trading rate with the headline rate, allowing firms to file as a single entity (‘fiscal unity’), dealing with issues around interest deductibility, maximising potential investment and innovation supports and a broader review of the corporate tax regime to ensure simplicity, certainty, and neutrality following a period of significant change. A package of tax competitiveness measures could usefully be achieved as part of the new domestic stakeholder engagement process committed to under the Corporate Tax Roadmap or it could be put on a permanent footing in the long run under an independent office akin to the Office of Tax Simplification in the UK.
o Make sure digital service tax proposals continue to be progressed through a multilateral framework. Ireland must continue to support a multilateral framework and take a firm stance against any unilateral proposals from other EU countries. Unilateral DST proposals in Europe create uncertainty and confusion for businesses operating in a multinational environment. It is important that Ireland continues to use its voice in Europe to call for a coherent and uniform approach to DST across Europe.
3. Back entrepreneurship and support innovation and R&D
While FDI will always play a welcome and important role in Ireland’s success, it is vital that we have a thriving indigenous tech sector also. Our tax system should reward entrepreneurs, while easier access to R&D support should help Irish SMEs compete internationally. Budget 2021 saw some improvements, but not enough to really help indigenous companies to grow and develop.
o Send a signal of intent to serial entrepreneurs by radically improving the CGT entrepreneurs’ relief: Expand CGT entrepreneurs’ relief to passive investors in high-potential and high-risk areas to increase the supply of equity for Irish companies. Losses on EII investment should be allowed for CGT purposes and any capital gains on the sale of shares taxed as capital gains rather than as income, as is currently the case.
o EIIS reform: The promised review by the Department of finance to assess how the Employment and Investment Incentive Scheme (EIIS) can be enhanced must be completed without delay. The revised annual €250,000 limit on EIIS investments, while a move in the right direction, is still restrictive and should be raised to €500,000. The current level is severely restricting the flow of capital to firms. The €500,000 limit on investments held over four years should be raised to €1 million.
o Introduce a pro-forma R&D tax credit: To help smaller firms overcome administrative costs and engage with the credit. The existing limit should be in line with UK’s R&D tax relief for SMEs with more generous tax treatment, reduced additional recordkeeping requirements, cash repayments upfront, and ‘advanced assurance’ for the first three times you claim it. This would be in line with the OECD “Road Map for SME and Entrepreneurship Policy in Ireland”. There should also be an increase in the science test limit to €100,000.
o Introduce accelerated capital allowances for a number of areas of advanced manufacturing (including computerised/computer aided machinery and robotic machines). Ireland has the second lowest density of industrial robots in the EU15, despite them being strongly linked with increased productivity.
4. Help Ireland embrace its role in EU digital regulation, strengthen regulatory capacities and lead on digital policy issues at an EU level
Recent research highlights that data-related regulatory issues have become a major investment attractor. Ireland plays an important role in the growing European (and consequently global) digital regulatory framework and should further leverage this expertise in shaping relevant EU and international regulatory discussions. To support our status as a global digital hub, we should deepen our capacities as a regulatory hub too. Ireland should ensure its capacities in the governance of data innovation are adequately resourced to match its role and provide for a robust and predictable regulatory environment.
o Increase funding to the Data Protection Commission by €5 million: The fallout from Schrems II will result in an inevitable extra workload for the DPC. It is vital that the DPC has the resources to carry out its work in a timely manner. This is a reputational issue for Ireland, given that we currently hold 30% of Europe’s data
o Fund training and information campaign on SCCs: Funding should be set aside to inform and assist Irish technology and non-technology sector companies transferring data to the US and implementing SCCs for the first time in the wake of Schrems II. The is increasingly important in light of the possibility of UK divergence in coming years from the current Data Adequacy Agreement between the UK and the EU.
