There has to be more tax incentives to promote investment in Irish companies so they can grow in scale, according to technology entrepreneur Joe Hogan.
He argued that Ireland is at a competitive disadvantage compared with other jurisdictions, particularly the UK, that have much more favourable regimes for investment in indigenous companies.
Mr Hogan was speaking at a conference organised by the Irish Stock Exchange looking into getting better access for funding for Irish entrepreneurs. He is one of two founders of Openet, which now employs 1,000 people.
He added that for small tech companies, one of the favoured methods of retaining staff in the early days was to offer share options. But under Irish law, these are taxed as benefit-in-kind payments, which can put a huge burden on small companies that have little capital.
It would be much more advantageous to move to the Israeli model, that allows all tax obligations to be paid when the company makes an initial public offering.
Moreover, he wants the Government to reform the capital gains tax regime.
The secretary general of the Department of Finance, John Moran, who was speaking at the conference, acknowledged Mr Hogan’s points. “It is appropriate that we have a discussion about these issues.”
It was not possible to rebuild the economy by just focusing on foreign direct investment. “There is a need for indigenous companies across all sectors, not just in technology. The challenge then is for them to keep going rather than sellout.”
In view of the constrained funding environment, Mr Moran said the Government was looking at ways of channelling savings into investment schemes that would support jobs and growth.
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