Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

I move amendment No. 11:

In page 14, line 25, to delete "pharmaceutical,".

Amendments Nos. 11 to 20 relate to the new key employee engagement programme, KEEP, introduced in budget 2018. KEEP is an SME focused share-option programme, intended to help small, growing companies to attract and retain key staff. It operates by providing that any gains realised on the exercise of qualifying KEEP share options will not be subject to income tax, PRSI or USC at the date of exercise. The gain will, however, be subject to capital gains tax on a future disposal of the shares.

The relief therefore has a twofold benefit. First, it reduces the tax payable from income tax to capital gains tax rates. Second, and possibly more important from the perspective of small unquoted companies, it provides that the tax will become payable on disposal of the shares, when the sales proceeds would be available to pay the tax due.

These amendments make two technical changes to the KEEP legislation in order to ensure that it operates as intended. Report Stage amendments Nos. 11 and 12 amend the definition of "qualifying company" to ensure the inclusion of enterprises in sectors that are part of Ireland's strategic enterprise and employment priorities. It expands the definition of qualifying company to include companies that provide pharmaceutical and engineering services.

My officials have continued to engage with small business representatives following the publication of the Finance Bill, and it was identified that the legislation could have the unintended consequence of incentivising a company not to grow beyond small and medium enterprise, SME, size while qualifying KEEP share options were on issue. Amendments Nos. 13 to 20, inclusive, correct this issue by amending the definition of "qualifying company" to specify that the conditions relating to the SME size requirement and the cap of €3 million on the maximum value of issued but unexercised qualifying KEEP options are to apply only at the time of the granting of KEEP share options. I commend the amendments to the House.

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