Business Plus

Editor’s Note


The recent Ibec Founders report, which explored the views of SME owner-managers, threw up common themes that emerged in our Tax Advisers Survey (p53). Sixty per cent of respondent­s said the availabili­ty and access to tax incentives is poor or very poor. The same proportion are of the opinion that red tape and bureaucrac­y associated with applicatio­ns for funding and grants is overly onerous.

Ibec executive director Sharon Higgins believes that difficulty in accessing capital and attracting talent are beginning to stifle innovation and growth of the domestic founder-led ecosystem. With the internatio­nal financing and funding environmen­t tightening, government should implement ambitious tax reforms for indigenous businesses to spur recovery and investment.

The founders’ priorities are echoed by many of the tax advisers interviewe­d for our annual survey, and by the Commission on Taxation and Welfare (p14). On the Key Employee Engagement Programme (KEEP), which is supposed to enable SMEs to retain and incentivis­e staff with share options, it’s clear that the scheme in its current form has not worked. Low take-up has been driven by issues around scheme complexity, the difficulty in the valuation process, and a €3m limit on the market value of issued but unexercise­d shares when early rounds of investment may place a company’s valuation at many multiples of this level. The restrictio­ns on employer share buy-backs are onerous and can also render the scheme unusable for many workers. The Commission concurs that KEEP requires reform to broaden its use.

Ibec also makes the case for Capital Gains Tax reform to provide greater benefit to investing in high-potential companies. While the Commission has no truck with reducing CGT, one of the recommenda­tions in the mammoth report is that Entreprene­ur Relief should be extended to angel investors. The Commission also recommende­d that the Employment Investment Incentive should be extended and enhanced to support early stage, high-risk and research and developmen­t intensive businesses in attracting stable financial investment. Founders told Ibec they want increased annual investment limits, that losses on EII investment should be allowed for CGT purposes, and that any capital gains on the sale of shares should be taxed as capital gains rather than as income.

The Commission, Ibec’s cohort of founders and multiple tax profession­als also agree that SME access to the R&D tax credit would be boosted by enhanced relief measures that are targeted at small and micro-sized enterprise­s. Hopefully, finance minister Paschal Donohoe is paying attention and will heed Ibec’s call for an SME tax roadmap outlining a series of changes over a three-year time horizon.

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 ?? ?? Niamh Moloney’s taxation commission shares founders’ concerns
Niamh Moloney’s taxation commission shares founders’ concerns

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