Brexit and business
What is in the budget?
- A cut in the CGT rate for entrepreneurs from 20% to 10% in gains up to €1 million.
- Retention of the 9% VAT rate.
- An increase in the earned income tax credit (EITC) for the self-employed from €550 to €950.
- A commitment to introduce an improved tax treatment of share options for SMEs, subject to EU approval.
- Additional funding for state agencies such as EI and the IDA.
- A town centre regeneration fund.
What does it mean for business?
There are a number of budget measures announced which sounded the right notes, but the scale of the measures is disappointingly small given the enormous challenge the country now faces. On the test of being ‘Brexit proofed’ it is clear the budget fell short. Just over €50 million in new or improved measures aimed specifically at offsetting the impact on business were announced.
On the tax side, the retention of the 9% VAT rate, improvements to share options and the increase in the earned income tax credit (EITC) for the self-employed will be very welcome for indigenous business. The 9% VAT rate in particular will help the tourism industry weather a likely fall off in visitor numbers from the UK, which remains a key market. The largest disappointment was the Capital Gains Tax changes which although welcome, fell well short of expectations leaving a large competitive gap remaining between Irish and UK tax treatment for SMEs.
There were two important improvements from a spending point of view with both Enterprise Ireland and the IDA getting additional funding to ramp up their Brexit and regional agendas. The town centre regeneration fund had been previously flagged but the €13 million in funding received will make it a useful scheme and was in line with Ibec recommendations.