John McGuinness (Carlow-Kilkenny, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

113. To ask the Minister for Finance if his Department has examined the option of exempting all small and medium enterprises with turnover of less than €150,000 from regulatory requirements in order to lessen the administrative and financial burden; the estimated cost of this to the Exchequer; and if he will make a statement on the matter. [19256/15]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

As Minister for Finance, I have responsibility for the development of the legal framework governing financial regulation, while the day to day responsibility for the supervision of financial institutions is a matter for the Central Bank which is statutorily independent in the exercise of its regulatory functions.

In relation to regulatory requirements, the Central Bank does not place any requirements on SMEs other than those authorised as a financial service provider. While the Central Bank has certain protections in place for SMEs, for example the Code of Conduct for Business Lending to Small and Medium Enterprises, the Central Bank does not place any requirements on SMEs.

The Central Bank's risk-based framework for the supervision of regulated firms is proportionate to the nature, scale and complexity of a regulated financial services provider while, at the same time, ensuring an adequate level of protection for consumers who avail of the financial service.  In that regard, the most significant firms - those with the ability to have the greatest impact on financial stability and the consumer - receive a high level of supervision.  Conversely, smaller financial service providers that pose a much lower risk are supervised accordingly.

Other regulatory requirements for this sector are primarily a matter for my colleague, the Minister for Jobs, Enterprise and Innovation. However I can advise the Deputy of the following changes which I have implemented in order to assist small to medium enterprises in lessening the administrative and financial burden.

Small businesses with a low turnover can opt to be exempt from VAT thereby avoiding the administrative burden that VAT registration entails.  The current thresholds are €37,500 for services and €75,000 for goods, in a 12 month period, these thresholds increased in 2008 from €35,000 and €70,000 for services and goods respectively. Any increase in the thresholds above the level of inflation would require a derogation from EU VAT law and agreement by all 28 Member States before it could be introduced.

Businesses with an annual turnover of €2 million or less can opt to account for VAT on a cash receipts basis, where VAT is not required to be paid until payment for the supply is received.

VAT returns are generally made bi-monthly, but in order to reduce administrative burdens Revenue allow half-yearly filing to taxpayers with an annual VAT liability of under €3,000, and filing three times a year to taxpayers with an annual VAT liability of between €3,001 and €14,400.

In Finance Act 2014 the special relief reducing the standard rate of Alcohol Products Tax by 50% on beer produced in small independent breweries which produce not more than 20,000 hectolitres per annum was extended to apply to small independent breweries which produce not more than 30,000 hectolitres per annum.

I would also refer the Deputy to my written reply today to his question regarding the provisions exempting small and medium enterprises from corporation tax and exempting the investors in such enterprises from capital gains tax.