Deloitte has called for updates to features of the Irish tax code as well as the introduction of a 20% tax rate on dividends.
In its Budget 2023 submission, Deloitte says that measures such as a 20% rate of tax on certain dividends to encourage growth in businesses and retention of cash for investment would be welcome.
The accountancy and advisory firm has also recommended immediate changes to the Employment Investment Incentive and Startup refunds for Entrepreneurs schemes to allow for the inclusion of professional services firms.
“In addition, an immediate action for Budget 2023 should be to provide for a tax efficient financing arrangement to enable early stage SMEs to secure funding,” said Lorraine Griffin (pictured above), head of tax.
Griffin added that to assist SMEs that are scaling their business internationally, amendments to provide for a more competitive Capital Gains Tax environment are critical.
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“Tapering relief to reduce the rate of CGT for entrepreneurs who stay in businesses with a view to scaling their operations would be welcome,” said Griffin.
“Rollover relief for persons who exit the business earlier but ultimately reinvest a portion of the proceeds would be a welcome medium-term action.”
In Griffin's view, an enhanced focus must be placed on measures that will provide for sustainable growth in the medium to long term, for example through changes which will future proof tax reliefs for Research and Development and by blue sky thinking in relation to the attractiveness of long term renewable energy projects.
The view from Deloitte is that the proposed introduction of the 15% minimum corporate tax rate could make it more competitive to attract inward investment to Ireland.
“Accordingly, one of the key areas of focus should be enhancing and improving our R&D regime, primarily by allowing for R&D tax credits to be fully refundable to the taxpayer," said Griffin.
“In addition, the benefit of the Knowledge Development Box may be eroded by the proposed Pillar Two rules which may impact on investment decisions in the medium term. Amendments to the KDB including an extension of the relief beyond its targeted end date of 31 December 2022 would be welcome.”
