Brendan Smith (Cavan-Monaghan, Fianna Fail)
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50. To ask the Minister for Finance the taxation measures that will be introduced in 2025 to ease the pressures on small and medium enterprises; and if he will make a statement on the matter. [45430/24]

Jack Chambers (Dublin West, Fianna Fail)
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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. This Government has been proactive in both reviewing these measures and introducing targeted new supports, and I have progressed this work by enhancing existing schemes in Budget 2025.

Tax Incentives for investments in small and medium enterprises

One issue which is consistently raised by the SME community is difficulty in raising finance. Taxation measures which are available to help SMEs to access investment, scale-up and expand include the Employment Investment Incentive (EII), the Start-Up Relief for Entrepreneurs (SURE), the Start-Up Capital Incentive, and the new Investor Relief for business angels.

I announced enhancements to EII, SURE and SCI in Budget 2025. The reliefs will be extended for a further two years to the end of 2026. The investment limit on the amount that an investor can claim relief on under the reliefs will be doubled from €500,000 up to €1 million. For SURE, the maximum qualifying investment in respect of which an investor may claim relief on over a seven-year period is being increased to €980,000 (€140,000 per annum).

Recognising the Government’s commitment to cultivate a thriving business angel investment ecosystem in Ireland, I announced on Budget Day that the lifetime limit on gains that an investor may avail of the reduced Capital Gains Tax rate is being increased from €3 million to €10 million.

Section 486C Start Up Relief

Section 486C Start Up Relief provides a corporation tax relief for new small companies in the first 5 years of trading. In broad terms, it allows relief of up to €40,000 per year against Corporation Tax (CT) liabilities, which may be carried forward where not fully used in the five years.

The relief is currently calculated by reference to Employers’ PRSI, up to a maximum of €5,000 per employee. Budget 2025 will extend the qualifying criteria to allow up to €1,000 of Class S PRSI per individual to count towards the €40,000 cap. Company directors who are owner/managers are generally liable to Class S PRSI, which does not have an Employers’ PRSI component, therefore small owner-operated companies may not have qualified for this relief to date. This will provide much needed support for small, owner-managed start-up companies.

Research and Development Tax Credit

In order to support companies undertaking smaller Research and Development (R&D) projects, in Budget 2025 I have increased the first-year payment threshold of the R&D Tax Credit from €50,000 to €75,000. This means that the first €75,000 of an R&D corporation tax credit can be paid in full in the first year of the claim, rather than being spread over the normal three-year payment window. This will be a valuable cash-flow support to all companies engaged in R&D projects.

This change maintains the Government’s focus on enterprise supports for productive and innovative businesses in the State.

Deduction for stock exchange listing expenditure

I announced in Budget 2025 a new tax deduction for expenses relating to a first listing (IPO) on a stock exchange in Ireland or the wider EEA. An overall cap of €1 million of expenses per listing will apply, with the relief being claimable by a company in the year of first successful listing. This measure will support businesses in the scale-up phase of their growth and development. It is aimed at encouraging more stock exchange listings - thereby providing wider positive benefits for the Irish economy.

VAT Registration Thresholds

From 1 January 2025, the existing VAT Registration Thresholds will be increased from €40,000 for services and €80,000 for goods to €42,500 for services and €85,000 for goods. This will assist small businesses with recent rises in inflation.

Participation Exemption for Foreign Dividends

I am introducing a new Participation Exemption for Foreign Dividends to simplify the existing double taxation relief provisions. The participation exemption for foreign-sourced dividends will work by providing alternative double tax relief for dividends by exempting qualifying dividend income received from corporation tax. This will provide businesses, including SME companies with a foreign subsidiary, an alternative, much simplified mechanism for double tax relief by reducing the complexity and administrative burden of the current system of double tax relief.

Small Benefit Exemption

The Small Benefit Exemption allows an employer to provide limited non-cash benefits or rewards to their workers without the payment of income tax, PRSI and USC.

As announced on Budget Day, I am increasing the annual limit provided for in the exemption from €1,000 to €1,500 and will also permit five non-cash benefits to be granted by an employer in a single year under this exemption. This change will allow employers greater flexibility in giving non-tax rewards to their employees. This means that workers may receive up to three additional tax-free rewards or gifts, for instance to reward exceptional performance, or mark significant life events.

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

Brendan Smith (Cavan-Monaghan, Fianna Fail)
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51. To ask the Minister for Finance if he will outline his recent engagement with the SME sector, with particular reference to the sector’s concern about increased costs; and if he will make a statement on the matter. [45431/24]

Jack Chambers (Dublin West, Fianna Fail)
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Small and medium enterprises are the life-blood of the Irish economy, accounting for the majority of employment in the State, and this government is committed to supporting small businesses so they can continue to thrive. SME’s vital importance to our economy is reflected in our Programme for Government commitments.

As Minister for Finance I have proactively engaged with SMEs and SME representative bodies covering almost every sector, from technology companies to small local retailers. Over the last number of weeks and months I have listened to the concerns raised by small businesses and industry bodies from across the country, in particular during the Budgetary process. I am cognisant of the challenges facing SMEs. A number of supports have been put in place by Government to assist SMEs with these challenges.

Supports under the remit of my Department include tax based measures and I have announced a number of enhancements to schemes in Budget 2025. Examples of these changes include an increase to the VAT registration thresholds, an increase in the R&D Tax Credit, enhancements to the to the Employment Investment Incentive and adjustments to the Small Benefit Exemption.

Moreover, the Strategic Banking Corporation of Ireland falls under my Department’s remit. It currently has two schemes open for applications from SMEs (and farmers) which aim to facilitate access to credit at competitive prices in these areas important to SMEs and Government, namely challenges arising from invasion of Ukraine by Russia, growing businesses and investing in sustainability. The Ukraine Credit Guarantee Scheme and the Growth and Sustainability Loan Scheme were both developed in conjunction with the Department of Enterprise, Trade and Employment, and the Department of Agriculture, Food and the Marine.

The Ukraine Credit Guarantee Scheme opened for applications on 20 March 2023 and provides a lending capacity of €1.2 billion, offering low cost working capital to SMEs, primary producers (i.e. farmers and fishers) and small mid-caps (businesses with fewer than 500 employees), which have been affected by the economic consequences of the conflict in Ukraine. Loans under this scheme can range from €10,000 to €1 million, repayable over a maximum of six years. Loans of up to €250,000 do not require collateral or a personal guarantee.

The €500 million Growth and Sustainability Loan Scheme was launched on 19 September 2023. This scheme is targeted towards the support of SMEs and farmers to grow their businesses, increase their resilience and enable them to transition to environmentally sustainable practices and systems. It provides for loans to SMEs, including primary producers, ranging from €25,000 to €3 million, for terms of seven to ten years. Loans of up to €500,000 can be provided on an unsecured basis.

Furthermore, I have worked closely with colleagues in Government in particular the Minister for Enterprise, Trade and Employment who has policy responsibility for SMEs in ensuring the concerns of SMEs are taken on board.

The Department of Enterprise, Trade and Employment has a number of initiatives in place specifically targeted at supporting SMEs. The SME package announced on Budget day focused on retail and hospitality sectors in particular. For example, the Power Up Grant was announced in Budget 2025, targeted at businesses in the retail and hospitality sectors. It offers a one-off flat payment of €4,000 to eligible businesses, and is administered via Local Authorities. This grant is a follow-up to the Increased Cost of Business scheme which has paid out over €244 million this year to approximately 75,000 SMEs (38,000 in the retail and hospitality sectors).

Further information on these incentives is available on the Revenue website at www.revenue.ie and on the National Enterprise Hub at www.neh.gov.ie.

Richard Bruton (Dublin Bay North, Fine Gael)
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52. To ask the Minister for Finance if an analysis of VAT returns reveals a pattern of a difficult time for small high-street businesses in the form of trends in yields, business closures or payment difficulties; and if he will make a statement on the matter. [45435/24]

Jack Chambers (Dublin West, Fianna Fail)
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I am advised by Revenue that the periodic VAT returns represent a high-level summary in respect of VAT payable and/or VAT reclaimable and do not provide sufficiently detailed data to support the type of analysis sought by the Deputy.

Regarding payment difficulties, Revenue’s clear preference is always to engage with taxpayers and businesses, and, where possible, to agree mutually acceptable payment arrangements in preference to deploying debt collection/enforcement sanctions. Revenue has a strong track record of successfully working with individuals and businesses to resolve their payment difficulties. In most cases, a mutually satisfactory solution is found without resorting to enforcement action. For example, taxpayers can enter into a Phased Payment Arrangement to pay off their debt in instalments over a period of time.

On completion of the Debt Warehousing Scheme in May 2024, over 12,700 Phased Payment Arrangements were agreed with taxpayers to secure a total of €1.2 billion of tax debt. I am advised by Revenue that this is the highest ever number of payment arrangements. The vast majority of these arrangements are still in place and being serviced by customers.

I am also advised by Revenue that, while the number of insolvencies to date this year has risen in comparison with the last few years, it is back to the levels that applied in 2018/2019.