A (Small) Step in the Right Direction

Budget 2022 provides some positive news for Ireland’s business community. The retention of the 12.5% rate for most Irish resident companies is an important development. However, BDO believes that much more needs to be done, particularly in the areas of high personal tax rates on both income and capital gains. Competitive tax rates are a key element for growth and jobs in the economy.

In its Budget submission, the Small Firms Association (SFA) requested substantial cuts to capital gains taxes (CGT) for business owners and much more generous reliefs for entrepreneurs who sell their businesses. It called for CGT to be reduced from the current rate for 33% to 20% and the lifetime limit for CGT Entrepreneur Relief to be increased to €15 million. Budget 2022 did not address any of the recommendations raised relating to the Entrepreneur Relief or CGT.

There is recognition that small businesses are essential to the Irish economy and provide a substantial level of employment to acknowledge the importance of Foreign Direct Investment (FDI), there are many small businesses in Ireland that are starting to expand and scale up rapidly. They need investment and they need help with R&D and Innovation. Of course, there are businesses which are still impacted by covid restrictions and are now only reopening, they need continued support to get back on their feet.