Contributor: Cian O’Sullivan, Partner, Private Client Tax, BDO
The SME sector continues to face rising costs, labour shortages and increasing compliance obligations. While Ireland's longstanding focus on attracting FDI has delivered significant economic success, growing international headwinds highlight the need to place greater emphasis on supporting growth, competitiveness and scaling of Irish-owned businesses.
Budget 2027 presents a timely opportunity to strengthen the indigenous business sector, enhance its contribution to the economy and reduce the reliance on the FDI sector. In our view, Budget 2027 should focus on the key areas outlined below.
We believe the Government should prioritise measures that encourage entrepreneurship, investment and business succession. In particular, a reduction in the 33% CGT rate, together with further enhancements of Entrepreneur Relief and Angel Investor Relief, would help unlock capital, facilitate reinvestment and encourage business growth. The recent changes to Retirement Relief should also be reviewed to ensure they do not create barriers to succession planning and family business transfers.
Access to talent continues to be a challenge for SMEs. While the KEEP regime has been improved in recent years, further reforms are required, including simplified valuation rules, greater flexibility for group structures and practical solutions to facilitate liquidity events for employee shareholders.
Targeted tax incentives to support digitalisation, AI adoption, cybersecurity investment and business transformation would help SMEs remain competitive and attractive in an increasingly digital economy.
Finally, much has been promised around tax simplification. This must remain a priority. Simplification of reliefs such as EIIS, KEEP, R&D credits and reduced administrative burdens on smaller businesses would allow SMEs concentrate on growth, innovation and job creation rather than compliance.?
Content adapted from Finance Dublin Irish tax Monitor.