To my mind, the solution is, therefore, twofold. One, we need to strengthen indigenous business and two, we need to diversify the multinational sector base.
While Ireland has a significant number of incentives aimed at SMEs, many need to be refreshed and streamlined to make them effective. Schemes such as the Employment Investment Incentive, Start Up Relief for Entrepreneurs and Key Employee Engagement Programme have, in general, not met their intended policy objectives and are cumbersome for small businesses to claim due to the administration involved.
The tax that really matters to investors and entrepreneurs is capital gains tax and our headline rate, at 33 per cent, is high by international standards. CGT receipts of €1.7 billion in 2022 are still substantially less than the €3 billion collected in 2006 when there was a 20 per cent CGT rate. Indeed, for the earlier life cycle stage groups with global turnover of less than €750 million, the 12.5 per cent rate of tax will continue to apply and Ireland’s wider advantages of being an English-speaking EU country with highly-educated talent remains attractive.
Many EU countries are using tax incentives to support businesses in reducing their carbon emissions and to encourage investment in green/energy efficient projects and Ireland’s current tax offering around the green agenda is behind the curve.
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