independent

Sunday 20 April 2014

Tax changes at centre of plan to help small firms

FINANCE Minister Michael Noonan yesterday unveiled an ambitious plan aimed at helping small businesses as the sector took centre stage in this year's Budget.

While most of the measures are by themselves small, he claimed that overall, his efforts would have a material benefit for small and medium enterprises (SMEs).

The centrepiece is a "10-point tax reform plan" which, Mr Noonan said, would help the sector access credit, cut costs, and encourage companies to hire more staff.

The measures include:

• Reforming Corporation Tax Relief for Start-up Companies to allow unused credits to be carried forward into following years, in an effort to increase the amount of cash a company can access. Currently, companies can only claim relief for their first three years in business.

• The value of dividends that can be paid by companies controlled by fewer than five people – known as "close companies" – without being liable for income tax will be increased to €2,000 to try to cut admin costs.

• Research and development tax credit will be doubled to €200,000.

• The threshold for the VAT cash receipts basic accounting threshold rises from €1m to €1.25m. This means companies can hold back paying more VAT until they have been paid.

• The Foreign Earnings Deduction for work-related travel to Brazil, Russia, China and India will be extended to eight African countries.

• The Employment and Investment Incentive scheme giving tax relief of up to 41pc on investments up to €10m will be extended to 2020.

• Tax law governing "carried interest" which a venture capitalist (VC) makes when he sells a firm he has invested in, will be reviewed to allow more companies access VC funds.

• The Revenue Commissioners and Department of Finance will hold a public consultation aimed at cutting administrative costs for companies with less than 10 staff.

According to Mr Noonan, the Government will also ramp up the number of staff at the Credit Review Office, which adjudicates on credit applications to small firms that have been turned down by AIB and Bank of Ireland, and give it specific powers to offer guidance on applying for a loan.

Separately, the Department of Enterprise is putting €175m into a seed and venture capital fund which it hopes to leverage up to about €700m.

Enterprise Minister Richard Bruton said about 100 companies were expected to get investment through the fund, which will be launched next year.

Meanwhile, the Department of Social Protection has dropped plans to introduce mandatory sick pay, which had been strongly opposed by business groups.

The measures were broadly welcomed by small business, but most groups warned against the measures being seen as a cure-all.

ISME's Mark Fielding gave a "guarded welcome" to the Budget, defending it as a "genuine effort" to help businesses.

Closures

"It has taken the first steps in a growth strategy by incentivising SMEs. Now the Government must continue with policies that will underpin competitiveness, support enterprise and instill confidence," he claimed.

That sentiment was echoed by Small Firms Association chairman AJ Noonan, but he criticised plans to remove the employer's redundancy rebate, claiming it would lead to "more business closures".

Irish Exporters' Association chief executive John Whelan said doubling the initial spend limit for R&D tax credits would go a long way to expanding new product development, while extending the Foreign Earnings Deduction Scheme "will encourage and support exporters to expand sales into the more distant difficult export markets".

Also in this Section

Classifieds

CarsIreland

Independent Shopping.ie

Meet, chat and connect with
singles in your area

Independent Shopping.ie

Meet Singles Now

Findajob

Apps

Now available on

Top Stories

Most Read

Independent Gallery

Your photos

Send us your weather photos promo

Celebrity News