Thursday 18 January 2018

Government to set out tax policy plan to help scale small companies

Julie Sinnamon, CEO, Enterprise Ireland, and David Moffitt, CEO of Enterprise Ireland client company Kayfoam and UK exporter, at the launch of a Brexit event for SMEs as the Government looks at ways of boosting the small firms sector
Julie Sinnamon, CEO, Enterprise Ireland, and David Moffitt, CEO of Enterprise Ireland client company Kayfoam and UK exporter, at the launch of a Brexit event for SMEs as the Government looks at ways of boosting the small firms sector
Colm Kelpie

Colm Kelpie

The Government is to look at ways of tailoring the tax system to help high performing SMEs expand and develop.

The Department of Jobs, Enterprise and Innovation, headed by Minister Mary Mitchell O'Connor, wants a medium term tax policy plan set out for scaling small and medium-sized businesses.

To support that, it intends carrying out an assessment of the tax environment, which will include pinpointing any aspects of the tax code which either positively or negatively affects the competitiveness of SMEs.

It will also look at how Brexit and the potential changes in the US tax system under President Donald Trump will impact small and medium-sized firms here.

"The project will develop actionable recommendations to inform tax policy discussions for Ireland's tax environment and administration system in support of scaling SMEs and new entrepreneurial businesses," the Department said.

"The analysis should be informed by international comparators and a particular focus is required on the impact of changing international tax environment and any emerging issue(s) or risks for scaling SMEs and new entrepreneurial businesses arising from Brexit and potential US tax reform."

The Department is looking for research and taxation experts to undertake the assessment.

"Indigenous Irish enterprise is an important driver of economic growth both nationally and regionally.

"Historically, two-thirds of new jobs in Ireland have been created by companies in their first five years," it said in a tender document.

"An environment supportive of scaling small and medium size enterprises and new entrepreneurial businesses and/or geographic international market diversification may be more effective in generating job creation in Ireland than policies aimed more generically at size classes of firm which is often informed by EU definitions." Researchers are also expected to analyse the impact of the difference between the Irish and UK tax offerings on businesses and their employees.

They must also assess the wider implications of international tax changes, including from the Organisation for Economic and Cooperation's (OECD) Base Erosion and Profit Shifting project.

A report from accountancy and consulting giant EY earlier this month warned that high personal tax rates are holding back the establishment and growth of businesses and stunting job creation,

Ireland needs to slash personal tax rates to create jobs and secure a Brexit dividend as the UK leaves the EU, it said, according to the survey of leading entrepreneurs.

Nearly three-quarters said the overall cost of doing business in Ireland, coupled with the high rate of capital gains tax, is dampening entrepreneurial activity.

It comes just days after Finance Minister Michael Noonan said the Government is planning financial support for exporters hit by Brexit, but it first needs approval from Europe.

He said the broad outline of the plans have been sent to Brussels to ensure they don't breach state aid rules.

Irish Independent

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