Peadar Tóibín (Meath West, Aontú)
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237. To ask the Minister for Finance if he will consider a lower corporation tax for small Irish businesses with profits below €100,000 per year to help generate more indigenous enterprise. [10245/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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SMEs are the foundation of the Irish economy, accounting for the majority of employment in the State. To support these small businesses, Government provides various tax reliefs, particularly during the start-up phase, allowing them sufficient time to establish themselves and become profitable. Their vital importance to our economy is reflected in our Programme for Government commitments.

At 12.5%, Ireland has one of the most competitive headline corporate tax rates in the OECD. This rate is applied to a broad base and has been an important part of our industrial policy over recent decades, and has attracted real and substantive operations to Ireland since then.

Ireland, like other smaller member states, is geographically and historically a peripheral country in Europe. A competitive corporate tax rate has been a tool to address the economic limitations that come with being a peripheral country, as compared to larger core countries. Ireland's 12.5% corporation tax rate plays an important role in fostering economic activity in Ireland be that in attracting FDI to Ireland or encouraging entrepreneurship. Importantly this policy also is a significant support to the indigenous sector applying equally to all companies operating in Ireland, including small companies with profits below €100,000 per annum. For MNEs with a turnover in excess of €750 million in two of the last four years per annum the tax rate increases to an effective tax rate of 15%.

I am advised by the Revenue Commissioners that in 2022 there were 87,040 companies with taxable profits below €100,000 which had a tax liability of €654m.

The Programme for Government commits to maintaining a broad tax base to guard against the need for counter-cyclical fiscal policy in the event of a downturn as well as to prepare for future budgetary challenges relating to population aging. Where any reduction in the corporation tax rate to be introduced this would have to be met with an increase elsewhere in the tax code to maintain Exchequer receipts. Furthermore, creating a threshold below which favourable treatment applies can result in unintended consequences for example by incentivising companies to limits profits which in turn can limit economic growth.

Both this Government and I are committed to delivering favourable trading conditions for all companies, particularly SMEs. The Programme for Government commits this Government to bring forward a variety of measures to support SMEs, to help them grow and prosper in a business friendly environment and I look forward to delivering on those commitments.

Given the reduced corporation tax rate and extensive benefits already in place, further reducing the tax rate for small business with profit under €100,000 would have limited economic impact while creating administrative complexities. Accordingly, it is my intention to maintain the already attractive 12.5% corporation tax rate.