Startup specialist accountants Noone Casey join us to address startup financial matters.
“I always knew I was going to be rich. I dont think I ever doubted it for a minute.”
We possibly need to remember the wise words of Warren Buffett rather than focusing on the missed opportunities within Budget 2016 for startups and entrepreneurs in Ireland. The top priority of this budget was to keep the recovery going, while providing relief and better services for the Irish people.
What we can takeaway from Budget 2016 are the following:
1. Capital Gains Tax relief for entrepreneurs will see a 20% rate applied from January 2016 as opposed to the general rate of 33% up to a limit of 1m.
2. Qualifying income for the Knowledge Development Box will be subject to corporation tax of 6.25%. This allows companies to make long term plans for their activities in Ireland.
3. EIIS, the amount that can be raised by a company, is doubled to 5 million annually subject to a lifetime maximum of 15 million, up from 10 million.
4. Earned Income Tax Credit to the value of 550. This is available to those with earned income who do not have access to the PAYE credit.
5. Employers PRSI of 10.75% now kicks in at 376 p/w.
6. The entry point to the USC will rise from 12,012 to 13,000.The three lower USC rates are to fall: the 1.5 per cent rate (on the first 12,012 earned) will be cut to 1 per cent; the 3.5 per cent rate (on income of 12,012 to 18,668) falls to 3 per cent; and the 7 per cent rate (on earnings of 18,668 to 70,044) will fall to 5.5 per cent.
7. Extension of three-year tax relief for certain startup companies for a further three years until end of 2018.
8. The recent OECD-led international tax reforms are very significant and this budget has gone some way towards helping Ireland maximise the opportunities that will be available for mobile foreign direct investment.
9. Free pre-school childcare will be available for children from 3 years until they start primary education or reach the age of five and a half years. Child benefit is to increase by 5 per month to 140 from January.
10. The Government is to legislate for two weeks statutory paternity leave.
Irelands tax policy remains short of what is required to support people who want to take the risk on real job-creating investments. Rewarding risk and raising capital are major issues that need to be continually discussed. We need to raise our competitive advantage, focus on seed investment and attracting talent through stock options. The Knowledge Development Box will assist in attracting new R&D to Ireland to help ensure that both indigenous and foreign-owned business growth continues to drive economic recovery.
We have to note that this is the best budget for entrepreneurs in over a decade. There are signals of a change in culture which rewards entrepreneurship and business growth and there are indicators that there is more to come. We hope that our driven entrepreneurs and investors will stay put in Ireland and work together to make the changes happen.
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Are you a startup with a tax or accounting query for our experts? Mail firstname.lastname@example.org and well address it in a future column.