Dublin Chamber seeks income tax breaks for SME expat recruits
An income tax break designed to woo top-tier executives to Ireland should be extended to indigenous companies seeking international talent, Dublin Chamber has argued in a presentation to Department of Finance consultants.
The lobbying group - Ireland's largest chamber of commerce, representing 1,300 employers - says Irish companies face a competitive disadvantage in recruitment because they are legally barred from offering the same tax enticements provided to multinationals.
The Department of Finance has hired economic consultants Indecon to review and recommend reforms to the Special Assignee Relief Programme (Sarp), which was launched in 2009 to make Ireland more attractive for expatriate executives of multinationals. Dublin Chamber submitted its views to Indecon on Tuesday.
"We need to level the playing field," Aebhric McGibney, director of public and international affairs for Dublin Chamber, told the Irish Independent.
"Irish SMEs typically don't have a sufficient international presence to allow them to recruit high-skilled staff globally or assign an employee from a foreign branch," he said, calling Sarp "effectively a tax benefit restricted to multinational firms and offering no accompanying benefit to the indigenous sector".
Under current rules, Sarp requires qualifying individuals to have a minimum base salary of €75,000; be tax-resident outside Ireland for five years before assignment here; and become tax-resident in Ireland for at least 12 months and up to five years before losing Sarp benefits.
Sarp reduces income tax liability on pay above €75,000 up to €1m annually - effectively dropping Ireland's top tax band of 40pc down to 28pc on that income - but offers no break on the universal social charge. Annual travel expenses of up to €5,000 and school fees of up to €5,000 per child can be reimbursed tax-free too. Dublin Chamber said Sarp was essential to keep Irish-based companies competitive, because Dublin in particular would become less appealing without it.
"In the context of Ireland's relatively high personal income tax regime, peripheral geographic location and sub- standard urban infrastructure, employers can encounter difficulty in persuading highly skilled workers to relocate here," the submission said. "This is often due to the perception that the high marginal tax rate in Ireland is not compensated for by a high quality of urban life."
Mr McGibney said SMEs faced rising difficulties in recruiting people with desired skills, with 60pc of members citing this as a problem, versus 47pc in late 2016. "Ireland is now in a war for talent," he said. "Access to skilled labour in Dublin is a problem affecting firms of all sizes, but SMEs particularly struggle to compete for the talent they need to expand. They face not only a tight labour market, but intense competition for specialists from multinational firms with a greater capacity to offer attractive salaries."