Budget 2015

Businesses gave the Budget announced by Michael Noonan a cautious welcome. Some measures were flagged in advance but the package of taxation and spending measures of €1.5bn will aim to assist this recovery and growth in a sustainable way. From a business perspective this budget will further aid an economy that is creating 1,100 jobs per week.

For The SME and  Corporate market here are the main points:

  • Capital Gains Tax for the self-employed and entrepreneurs drops from 33% to 20%
  • An increase in the entry point for the top rate of Employers PRSI of 10.75% by €20 to €376.
  • A new ‘Earned Income Tax Credit’ to the value of €550 for self-employed workers who didn’t previously have access to the PAYE tax credit
  • Three year tax relief for startups extended until 2018
  • Corporation Tax is unchanged
  • The introduction of  a Knowledge Development Box – means of accessing a lower rate of corporate tax – 6.25% – to incentivise R&D  and unique enterprise
  • Commercial tax rates on vehicles are to be made less complex – the range of brackets will reduce from 20 to five, ranging from €92 to €900
  • There are over 28,500 vehicles expected to be affected by the change in the tax-rate band
  • 9% VAT rate for the tourism sector to remain unchanged
  • The minimum wageis to increase by 50c to €9.15 as recommended by the Low Pay Commission
  • The Department of Jobs is to receive €792 million in 2016, €500 million of which will go to enterprise agencies
  • There’s good news for retailers though,  Savings for retailers of €36m in reduced costs of accepting card payments
  • An extension of the bank levy to 2021 from the original deadline of 2016, which will take in an additional €750m in the additional years

Commenting on these measures Dublin Chambers, Gina Quinn said:

“Starting or growing a young company is risky. Yet younger firms are the largest contributors of new jobs due to the inverse relationship between growth and size, according to the Central Bank. Ireland’s tax policy needs to support people who want to take the risk on real job creating investments.”

“I hoped that Budget 2016 would throw open the door to entrepreneurs with an appealing tax regime for start-ups and small firms. The changes announced in Budget 2016 have opened the door, but only by a crack.”

ISME CEO, Mark Fielding says of the budget: “The fact that ISME’s lobbying for the self-employed over many years has eventually paid off is welcome and we suggest that the job should be completed in two years. The Association had also been to the fore in the push to have the Capital Gains Tax on entrepreneurs reduced, we welcome the reduction to 20%, as the high rate is having a detrimental effect on business transactions”.

“Labour costs are still too expensive and restrictive in terms of trying to grow employment. The increases in the tax burden on hard pressed employees have in effect been “passed back” to employers in the form of wage demands to compensate for reductions in net pay.”