Family and private businesses in Ireland want tax bracket increases and credits in this year’s budget that are in line with current inflation.
Reducing the employer PRSI, reducing the standard rate of VAT to 21% and extending the 9% VAT rate for hospitality until the end of 2025 are among the other measures proposed in the submission prepared by PWC in collaboration with the Family Business Network.
The submission also calls for a reduction in capital gains tax (CGT) on non-real estate investments from the current rate of 33% to 20% to support investment by private companies and entrepreneurs in private enterprises. They also want the capital acquisition tax (Cat) threshold to be raised, including all gifts and inheritances from parents to their children, from €335,000 to €500,000.
“While the fundamentals of our economy remain solid such as employment, FDI [foreign direct investment] inflows, exports and tax revenues, there is currently a geopolitical crisis with supply chain disruptions and rising inflation,” the submission reads.
“Measures to stimulate growth and investment in private businesses should be monitored and targeted to protect Irish businesses as much as possible against the significant inflationary and global supply challenges that are likely to persist into 2023.”
PWC also argues that introducing mechanisms to facilitate the transfer of businesses to the next generation without incurring upfront punitive tax costs was necessary.
The key elements of the submission are:
- Increase tax brackets and credits as well as travel and living rates to be at least in line with current inflation;
- Reduce the employer’s PRSI so that companies can partially offset the increase in labor costs;
- Introduce incentives in the form of reduced tax charges for Irish companies to rent properties to their staff, either on a short or longer term basis;
- Improve action-based incentives to suit the purpose of private enterprises;
- Reduce late payment interest on all tax headings to 3% (currently 8%/10%);
- Reduce the standard VAT rate from 23% to 21%;
- Extend the 9% VAT rate for the hospitality sector until December 31, 2024;
- Introduction of rebates for remote work accompanied by improvements to the incentive scheme for investment in employment and the R&D tax credit scheme;
- A reduction in the CGT rate on non-real estate investments from 33% to 20% to support investment by private companies and entrepreneurs in private companies;
- Measures to incentivize individuals and the private business sector to invest in green properties – for example, introducing additional “green” tax relief in respect of CGT debts arising from the disposal of properties which have been renovated;
- Introduction of tax breaks and incentives in the field of renewable energies to encourage investments in this field;
- Raising the Cat A band threshold (including all gifts and inheritances from parents to their children) to €500,000, from €335,000;
- Introduce mechanisms to facilitate the transfer of businesses to the next generation without incurring upfront punitive tax costs (e.g. an “upfront payment” of gift/inheritance tax applying, with any tax balance being spread over a longer period of at least 10 years);
- Changes to the revised relief for entrepreneurs whereby dividends would be subject to a 10% tax.