6 key measures coming into effect.
In his 2013 Budget speech in December, the Minister for Finance introduced a 10 point tax reform plan which he said would assist the cash-flow and “ability to pay” of small Irish business. These measures are now included in theFinance Bill which is currently passing through the Dáil.
The measures include changes to corporation tax, VAT, CGT and income tax. It is debateable what impact they will have for small business.

The measures include:

  1. Reform of the start-up exemption for corporation tax. The reform will allow companies to carry forward relief which they don’t use in the first three years of trading. This is welcome as many companies don’t realise profits in the start-up phase
  2. Improvement in the tax relief for research and development expenditure – the amount relieved without reference to the 2003 base year is increased from €100,000 to €200,000. In addition, the Finance Bill proposes to reduce the amount of time “key employees” are required to devote to R&D to personally avail of the R&D credit. These are welcome changes for companies who engage in R&D activities
  3. VAT Cash receipts threshold increased from €1m to €1.25m – this is welcome but is not likely to assist a significant number of businesses
  4. Public consultation on the taxation of micro enterprises, with a view to reducing the compliance costs for small businesses. Revenue have published their current thoughts on this issue and they appear to be sceptical about the introduction of simplified “Single Business Tax”. However they do appear to be in favour of simplified system of accounting and profit calculation for small business
  5. Proposed Extension of the Employment and Investment Incentive Scheme from 2014 to 2020. This is welcome, but it would have been surprising if the scheme had not been extended beyond 2014
  6. The other proposals are mostly technical and include changes for specific industries such as farming. They are not likely to have a significant overall impact for the small business sector.
In summary, while the proposals are welcome, they are not likely to significantly benefit small business. It is hoped that the Government will continue to review taxation of the small business sector and make more meaningful changes which will make a real difference.

If you wish to discuss the finance bill or any other tax matters; HSOC Financial & Business Advisors would welcome the opportunity to work with you. We are contactable on 01-2804731 or via our contact form on the right of this page.
Shane Roe – Tax Manager
5th March 2013
The opinions set out above are personal to the writer.