A Future Tax Strategy to Grow Indigenous Irish Exports – Irish Institute of Taxation
The Irish Institute of Taxation recently published a comprehensive report titled A Future Tax Strategy to Grow Indigenous Irish Exports. The report has received much favourable comment in the media. The tax system must be transformed to provide incentives to entrepreneurs and support to businesses in developing their export potential.
The key recommendations are
- Tax policy must reflect the specific needs of the indigenous sector.
- A reduction in Ireland’s CGT rate of 33%, the fourth highest in the OECD. For example, Germany’s rate is only 25%.
- Venture capital finance should be encouraged as an alternative to bank finance. The use of venture capital funding is greatly influenced by tax policy for example with Entrepreneur Relief, the reduced rate of CGT 10% is not available to external investors. The UK has the highest level of venture capital investment in Europe.
- Firms use of the R&D tax credit regime is poor due to the perceived complicated nature of the qualification and compliance procedures.
- Tax policy has major implications for entrepreneurship by reducing the rewards of success. Our system tax must provide a range of measures to incentives and risk takers and their key employees. Such as an appropriate share award scheme, reduction in effective income tax rate and removal of disparities in the tax treatment between PAYE workers and the Self-employed.