Martin welcomes €272 Million Budget package for Small Business and R&D

The Minister for Enterprise, Trade and Employment, Micheál Martin, T.D. welcomed today’s Budget as a milestone in improving the environment for Small Business and as a Budget that will further incentivise Research and Development and protect our competitiveness.

This budget will be a real boost for the 250,000 Small Businesses operating in Ireland and the 800,000 people which they employ, the Minister said. “The measures announced will continue to support and develop the spirit of entrepreneurship in Ireland”.

Minister Martin who set up the Small Business Forum which identified priorities for action said, “this Government is delivering on the priority tax recommendations that the Forum has made.”

The Minister welcomed the extension to 2013 and radical enhancement of the Business Expansion and Seed Capital Schemes at a cost of €25m in a full year. ‘The almost five fold increase in the BES investor limit to €150,000 and the doubling of the company limit to €2m. will significantly enhance the attractiveness of the Business Expansion Scheme.

‘These changes will tackle the difficulties faced by small businesses in raising capital to pursue entrepreneurial risk taking. Fostering the growth of wealth creating enterprises is of central importance if Ireland’s economic success is to be sustained in the long term’, the Minister added.

The Minister strongly welcomed the VAT accounting changes that will benefit smaller and early stage companies to the tune of €53m per annum in addition to a once off cash flow gain of €35m.

‘The increase in the VAT registration threshold to €70,000 for goods and €35,000 for services and the cash basis threshold to €1 million will greatly encourage early stage entrepreneurial activity and support small business development into the future.’ the Minister said.

‘These measures will greatly reduce compliance costs and remove 8,000 businesses from the VAT net; a testament to the Government’s commitment to reducing administrative burdens on business and particularly Small Business.’

The Minister also welcomed the trebling of the Small Business threshold for the payment of Preliminary Corporation Tax from €50,000 to €150,000 and the provisions for new companies. This new simplified system will further ease the administrative and accounting burden for the 97% of companies to which it will apply.

The Minister believes the substantial income tax relief package will further incentivise employment, reduce labour costs and reward workers. Ireland has the second lowest tax wedge in the OECD and the enhancements of this Budget will further reduce the tax wedge and further incentivise work. “Ensuring those on the minimum wage stay out of the tax net will also assist those who are unemployed to transfer to the active labour market,” the Minister said.

The Minister described the Budget as one that delivers for business, for workers and for sustainable prosperity for the years ahead.

The Minister strongly welcomed the improvements to the R&D tax credit estimated at €70m in a full year. ‘The increase from three to six years in the period of tax benefit for incremental R&D will not only enhance the value of the incentive but provide critical longer term certainty for both indigenous and FDI companies making key strategic decisions to invest in R&D or locate R&D activities in Ireland.

“We are sending a clear signal to business that this Government is supporting their efforts to develop new products and win new markets”.

The R&D tax credit dovetails with the major investment to be made under the Government’s new Strategy for Science, Technology & Innovation launched in June. ‘These investments will provide Ireland with a sustainable long-term basis for growth in employment and incomes.