Shay Brennan (Dublin Rathdown, Fianna Fail)
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28. To ask the Minister for Enterprise, Trade and Employment how Budget 2026 will support the SME sector; and if he will make a statement on the matter. [62048/25]

Peter Burke (Longford-Westmeath, Fine Gael)
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Budget 2026 is a pro-enterprise Budget and was framed in consideration of the Action Plan on Competitiveness and Productivity and the Programme for Government (PfG) 2025: Securing Ireland’s Future. The ongoing Finance Bill process will ensure that the tax changes made in the Budget are placed on a legislative footing.

Budget 2026 has introduced a number of new tax measures - alongside changes to existing measures - that will support the SME sector, including the following:

• A reduction in the Hospitality VAT rate from 13.5% to 9%, which will be introduced from 1 July 2025. This reduction will apply specifically to food/catering and hairdressing. This reduction in the VAT rate will address concerns raised by the sector about business viability.
• The Employer PRSI threshold has been increased to ensure that employers do not pay the higher rate of PRSI for full-time workers earning the minimum wage.
• The R&D tax credit has been increased from 30% to 35%, with SMEs due to benefit proportionally more from this change than larger firms subject to the minimum effective tax rate. The increase in the first-year payment threshold, from €75,000 to €87,500, is also beneficial for SMEs. Furthermore, as noted by Minister Donohoe in the Budget 2026 speech, an R&D Compass will be published shortly to set out the future direction of developments in R&D and innovation.
• The Key Employee Engagement Programme (KEEP) has been extended for a further three years. KEEP is a share option scheme aimed at helping SMEs to attract and retain skilled employees in a competitive market.
• Budget 2026 has also increased the lifetime limit of the Revised Entrepreneur Relief from €1m to €1.5m, which provides a significant potential benefit for scaling companies.