Irish Economy
Call for cut in Irish capital gains tax to boost entrepreneurs!
By Michael Hennigan, Finfacts founder and editor
May 27, 2014 - 7:58 AM

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The Small Firms Association (SFA), an Ibec affiliate, has called for a cut in the Irish capital gains tax (CGT) rate to boost reinvestment by entrepreneurs and to increase the number of startups.

The SFA is holding its annual conference today and demanding tax cuts is not strange for business lobbies but any potential entrepreneur who worries about CGT should not waste his or her time preparing for failure.

The rate was halved to 20% in the 1990s and it was one of the self-financing tax cuts that was touted during the bubble.

The current rate is 33% and in last October's Budget, Michael Noonan, finance minister, announced a new Capital Gains Tax relief for those who re-invest in assets used in new productive trading activities.

Individuals who paid CGT, and re-invest in a new business in the period from 1 January 2014 to 31 December 2018, will qualify for Capital Gains Tax relief.

The relief is conditional on holding the new investment for a minimum period of three years.

Capital Gains Tax payable on a future disposal of the new asset will be reduced by the lower of:

  • Capital Gains Tax payable on a previous disposal of assets in the period from 1 January 2010, or
  • 50% of the Capital Gains Tax payable on disposal of the new asset.

Ireland's corporate tax rate and employer social security rates are among Europe's lowest.

On personal taxes AJ Noonan, SFA Chairman, called for the personal tax bands to be extended to encourage personal effort and enterprise. “When a Single Person hits €32,500 in salary they get hit with the higher rate of tax. The incentive to work is not there. Risk must be rewarded.”

Addressing small firm concerns on public procurement, Noonan said that small businesses are effectively being prohibited from tendering for public contracts, in the move to centralise government procurement into large-scale contracts.

“In 2013, the published data suggests that 28% of tenders are being awarded to countries outside of Ireland, up from a previous high of 18% recorded.  Ireland frequently tops the list of countries most likely to award to non-national countries and this trend is increasing all the time.” 

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