Joe Flaherty (Longford-Westmeath, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

120. To ask the Minister for Finance if he will be reviewing the tax incentives for the SME sector in the context of Budget 2025; and if he will make a statement on the matter. [28480/24]

Jack Chambers (Dublin West, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

SMEs are the foundation of the Irish economy, accounting for the majority of employment in the State. Their vital importance to our economy is reflected in our Programme for Government commitments.

The tax system contains a number of incentives and reliefs designed to support SMEs. My predecessor, Minister McGrath, was proactive in both reviewing these measures and introducing targeted new supports, and it is my intention to continue on in this vein.

The taxation measures which are available to help small businesses to access investment, scale-up and expand include the Employment Investment Incentive (EII), the Key Employee Engagement Programme (KEEP), the Revised Entrepreneur Relief and the new relief targeting angel investors. These tax incentives have undergone significant change in recent years following feedback from stakeholders, including in particular the SME community, and a formal review of the EII scheme is currently underway.

The Deputy may also be aware of the Start-Up Relief for Entrepreneurs (SURE) and the Start-Up Capital Incentive (SCI), which assist new companies with early-stage funding, and the section 486C relief from corporation tax available in respect of the first five years of trading for start-up companies with an annual tax liability of less than €60,000. The purpose of the reliefs is to encourage entrepreneurs and start-up companies in Ireland, thereby supporting additional employment and economic activity in the State.

Budget 2024 also provided for an increase in the Research and Development (R&D) tax credit from 25% to 30%, and for a doubling of the first-year payment threshold from €25,000 to €50,000. While these increases are relevant to businesses of all sizes, the will be of particular benefit to smaller companies outside the scope of the new Pillar Two rules introduced with effect from end-2023.

Further information on these incentives is available on the Revenue website at .

Finally, the increasing complexity of the tax system is a concern frequently raised by businesses, particularly smaller businesses with more constrained resources, and I am committed to making efforts to simplify the tax system where possible. As part of this initiative, a participation exemption for foreign sourced dividends is to be introduced in Finance Bill 2024. The detailed development work on this project will continue over the coming months and it is intended that, when operational, the participation exemption will provide administrative and competitive benefits for businesses operating in Ireland.