PwC today called on Government to make a number of proposed changes to the Irish Tax System in the upcoming Budget in October that would support Irish entrepreneurs and family businesses in the current uncertain business climate.
The proposals are the result of a detailed consultation process undertaken by PwC with members of the DCU National Centre for Family Business and the Family Business Network. PwC say there are a number of areas where the Irish tax code could be improved to better support Irish owned businesses.
The group believes these proposals are straightforward and inexpensive and would help Irish entrepreneurs and family businesses create jobs, retain key talent, raise investment as well as help intergenerational succession.
The key proposed changes include:
• Remove the arbitrary €3m cap on the value which can qualify for Retirement Relief on the transfer of shares for those aged 66 years of age and older
• Increase the threshold for capital gains which can qualify for the reduced 10% rate of CGT under Entrepreneurial Relief (e.g. in UK the first £10 million of gains attract relief compared to €1 million in Ireland)
• Remove anomalies from how CGT Retirement Relief is calculated to avoid confusion and to ensure that it operates on a consistent basis with Capital Acquisitions Tax (“CAT”) Business Relief
• Introduce a ‘future use’ test to ensure that any business assets (including cash) which are considered essential for the future success of the business, are not excluded from Business Relief on the transition of a business to the next generation
• Remove the 90% cap to provide full relief from CAT under Business Relief, similar to the equivalent relief in the UK
Speaking this week, Tax Partner, PwC Entrepreneurial & Private Business Practice, Ronan Furlong said, "The Irish tax system has been very successful in supporting the economy through the encouragement of Foreign Direct Investment. However, based on our consultation, there are a number of areas where the Irish tax code could be improved to better support Irish owned businesses."
He added, "These proposals are straightforward and inexpensive and would help Irish entrepreneurs and family businesses create jobs, retain key talent, raise investment as well as help intergenerational succession. This becomes even more important in the light of Brexit as Irish private businesses want to compete on a level playing field with their counterparts in the UK."