Taxation and jobs policy ‘out of sync’

Government policies on taxation and the creation of jobs are completely out of sync, according to the Irish Venture Capital Association.

Speaking at the Oireachtas Joint Committee on Jobs, Enterprise and Innovation focusing on the difficulties that SMEs face in raising capital, the head of the association Regina Breheny said that Ireland has lost some of its competitiveness compared to other jurisdiction particularly in the levels of capital gain tax that entrepreneurs face.

“Ireland’s tax regime has lost significant competitiveness compared to the UK. There is a misalignment between the Government’s tax policy in regard to entrepreneurship and the key objectives in the Action Plan for Jobs 2014.

“The association is lobbying the Departments of Jobs Enterprise and Innovation and Finance to redress this disadvantage,” said Ms Breheny. In Ireland, a successful entrepreneur who sells his business will face a capital gains tax rate of 33% whereas in the UK the system is based on a sliding scale that starts as low as 10% for some.

The divergence between the taxation regimes as well as higher rates of personal taxes in Ireland has made it more difficult for Irish start-ups to attract talent.

Another issue that the Irish venture capital industry is facing is that shortage of institutional investors who are willing to put money into venture capital funds.

The factors means it has become difficult to raise funds to support the growth of innovative SMEs.