Budget a missed opportunity to support local businesses

Although the minister had limited resources available and many competing demands, he has carefully targeted some support to the indigenous sector, but more could have been done to help companies on the road to recovery and renewal. Picture: iStock

Budget 2022 presented an ideal opportunity to promote entrepreneurship, support growth and create jobs in our private and family business sectors, which employ 45% of people working in Ireland. With very limited resources and many competing demands, it delivered on some fronts, but there were certainly some missed opportunities.

It was fundamental that the minister committed to the 12.5% corporate tax rate for companies with a turnover of less than €750m for the foreseeable future. In practical terms, this means that most indigenous businesses will continue to be taxed at 12.5%. With many costs rising, this certainty is vital for the sector.

It was really important that the EWSS was extended into 2022 to avoid any cliff edges for those businesses that are only reopening now. The relief will be tapered over the period to the end of April 2022. It is hoped this tapering will strike the balance between supporting businesses while at the same time recognising that the economy is growing strongly.

The extension of the 9% Vat rate for the hospitality sector to the end of August 2022 was critical to enable that sector to benefit from next year’s tourist season. 

The extension and enhancement of the start-up company relief is welcome. The relief is now available for five years and this should help encourage entrepreneurship. 

There are also some welcome enhancements to the Employment Investment Incentive scheme. This is designed to encourage investment. This relief has failed to really make an impact in recent years as it is too complex and too restrictive. The changes announced seek to address these barriers and it remains to be seen when we get the details in the Finance Bill as to whether these changes will go far enough.

It is disappointing that there was almost no extension announced to the tax warehousing scheme. There is a significant amount of tax warehoused by SMEs and it will take time for those entities to be in a position to repay this money. 

Successful transition to the next generation is critical for the long-term survival of family businesses. Currently, there are several blockers to the efficient transfer of family-owned businesses. Ireland’s capital gains tax and capital acquisition tax is out of kilter by international standards and has long been a frustration for Irish entrepreneurs. 

We would like to have seen an improvement in the capital allowances available for energy efficient equipment and more ambitious announcements around retrofitting. What was announced was minimal, which represents a missed opportunity and threatens our ability to meet our 2030 climate targets.

Although the minister had limited resources available and many competing demands, he has carefully targeted some support to the indigenous sector, but more could have been done to help companies on the road to recovery and renewal. Maybe next year we’ll see that more creative thinking that Irish businesses have been calling for.

• Nicola Quinn is a tax partner at PwC, specialising in the entrepreneurial and private business sector