Overhaul and reform of SME tax system urged to spur startups

Deloitte says move should be part of taxation and welfare review 

Deloitte said a 'significant' number of reliefs and incentives aimed at SMEs need to be refreshed and streamlined.

A reformed tax system for SMEs, to encourage the establishment of more start-up companies and to incentivise entrepreneurs, has been called for as part of a planned overhaul of how the State funds itself.

In its submission to the Commission on Taxation and Welfare, which is set to review the country’s tax system, Deloitte said more attention needs to be given to small businesses and entrepreneurs, in terms of tax measures, as has been the case with multinationals when attracting in-bound investment.

Deloitte said a 'significant' number of reliefs and incentives aimed at SMEs need to be refreshed and streamlined, while many other measures have had limited take-up.

Deloitte wants an enhanced R&D offering and a form of tapered capital gains tax relief, which would see the CGT rate reduce the longer an entrepreneur 'stays the course'. 

Reduced CGT should be considered for entrepreneurs who scale up their business over the medium to long term, it said.

"Ireland should focus on supporting a first-class productive and innovative SME sector, capable of being scaled from Ireland, that is profitable and produces high-value jobs," Deloitte said in its submission.

"Ireland needs to ensure SMEs have access to capital and talent and receive the necessary support to drive research, development, and innovation," it said.

“A strategic review of the taxation system pertaining to SMEs and entrepreneurs should be carried out to create a competitive SME tax system,” it said.