Cormac Devlin
Question:253. Deputy Cormac Devlin asked the Minister for Enterprise, Trade and Employment to detail the pro-enterprise measures taken by the Government; and if he will make a statement on the matter. [6246/24]
View answerTuesday, 13 February 2024
Questions (253)
Written answers
Launched in December 2022, the White Paper on Enterprise sets out Government’s approach to enterprise strategy for the medium to long-term, which will work to enable Irish-based enterprise to succeed through competitive advantage founded on sustainability, innovation and productivity, delivering rewarding jobs and livelihoods.
In order to achieve this vision, Government has set out seven enterprise policy objectives in the White Paper; integrating decarbonisation and net zero commitments, placing digital transformation at the heart of enterprise policy, advancing Ireland’s FDI and trade value proposition, strengthening the Irish-owned exporting sector, enabling locally trading sectors to thrive, stepping up enterprise innovation, and building on Ireland`s existing strengths and opportunities, through a clustering approach.
My Department is leading on the Implementation of the White Paper on Enterprise, where 40 key initiatives across all seven policy priorities are being advanced across Government. Progress on these initiatives is reported on every six-months, to the Cabinet Committee on the Economy and Investment.
Wider supports for SME`s and Entrepreneurs set out in the White Paper on Enterprise 2022-2030 include; supporting firms to decarbonise and providing fiscal support for firms in the green and digital sectors; improving access to finance for start-ups and scale-ups; increasing the number of first time exporters; increasing productivity growth in domestic sectors; expanding programmatic supports to capture additional SME`s/Entrepreneurs; enhanced assistance for High Potential Start Ups; and reducing the regulatory burden on SME`s/Entrepreneurs.
The Government has provided significant support to business throughout the period of increasing overheads and has been proactive in limiting the fallout from higher rates of inflation in input costs and prices. However, it is not possible to insulate every business from the total impact of these costs.
Over the two-year period prior to Budget 2024 a total of €12 billion – 4½ per cent of national income – was provided in cost of living and doing business supports, comprising a mix of permanent and one-off measures, to absorb some of the impact and ease the burden of inflation on households and businesses. The main programme introduced by Government to alleviate cost pressures for small business was the €1.3 billion Temporary Business Energy Support Scheme (TBESS).
Budget 2024 contained a number of measures which will support businesses facing increased costs of doing business.
The 9% VAT reduction for gas and electricity is being extended for an additional 12 months, until 31st October 2024;
The temporary excise rate reductions applying to auto diesel, petrol and marked gas oil which were due to expire on 31st October 2023 was extended until 31st March 2024;
An increase in the limit on the amount that an investor can claim relief on under the Employment and Investment Incentive Scheme, to €500,000;
An increase in VAT registration thresholds for SMEs to €40,000 for services and €80,000 for goods;
Reduced Capital Gains Tax rate of 16% for Angel Investors in innovative SMEs, on gains of up to €3 million;
An increase in the R&D tax credit from 25% to 30%, as well as increasing the first-year upfront payment from €25,000 to €50,000, which will be of particular benefit to SMEs;
The commencement of a range of amendments to the Key Employee Engagement Programme for the attraction and retention of staff.
The Increased Cost of Business Grant (ICOB) was announced as part of Budget 2024 and will be targeted at Small and Medium sized businesses who operate from a rateable premises. Government has approved a fund of €257 million for the ICOB grant. This fund will reach 143,000 businesses which is 95% of all rateable businesses in all corners of Ireland.
The grant is intended to be paid at a rate of half the enterprise’s commercial rates bill in 2023, for firms paying up to €10,000 in rates. For those paying between €10,000 and €30,000 in rates, they will receive a grant of €5,000.
My Department is leading the introduction of this scheme, working in conjunction with the Local Authorities and the Department of Housing, Local Government, and Heritage to ensure that support can be provided in early 2024. A Service Level Agreement (SLA) is currently being drafted between my Department and the Local Authorities, to underpin the operation of this scheme. This SLA will cover the delivery, funding, and oversight arrangements for the grant scheme.
The administration of the ICOB grant will be carried out by Local Authorities and it is intended that the grant will be provided to qualifying firms in the first quarter of this year. It is not intended that there be a formal application process, rather it is intended that the business will be contacted directly by the local authorities. The grant scheme has been set up in this way so as to ensure that the scheme is accessible to smaller businesses, who may have had difficulties availing of previous schemes.
In recognition of concerns about the abrupt cut-off point of the scheme as initially announced on Budget Day and the need to provide support to firms who were at the margins of the scheme as initially designed, in December 2023, the ICOB grant was extended to ratepayers paying up to €30,000 in rates. This required a reallocation of resources to ensure sufficient funds were available.
However, to ensure that the smallest firms see the greatest benefit, the grant payment for firms paying less than €10,000 in rates was unchanged, at a rate of half the enterprise’s 2023 commercial rates bill. For those paying between €10,000 and €30,000 in rates, they will receive a grant of €5,000. This further ensures that smaller premises receive a higher proportional grant. My Department will continue to monitor what remains a challenging businesses environment and continue to support Irish businesses.
It is understandable that businesses are concerned about the costs that they are encountering at the moment. The Government has provided significant support to business, throughout this period of rising costs and has been proactive in limiting the fallout from higher rates of inflation in input costs and prices.
Over the last several years, Government has advanced a range of measures to improve working conditions in Ireland, including the transition to a Living Wage, Auto-Enrolment Retirement Savings Scheme, Parent’s Leave and Benefit, Statutory Sick Pay, an Additional Public Holiday, the Living Wage, and Remote Working. Extensive public consultations have been held in relation to the introduction of these measures.
Government has endeavoured to introduce these measures on a staggered basis. While these measures will have cost implications for some businesses, there are also important economic and societal benefits which will be delivered, by means of increasing disposable incomes and addressing in-work poverty. These changes will also bring Ireland in line with other advanced economies.
In line with a recommendation from the National Competitiveness and Productivity Council, in its report Ireland’s Competitiveness Challenge 2022, there is currently an assessment of the combined impact of recent and forthcoming changes to working conditions being undertaken by my Department and the Department of Social Protection. This report is supported by evidence received from both employer and trade union perspectives and will be finalised in the coming weeks.
SME Taxation Measures in Budget 2024
The introduction of a new standalone, Angel Investment Scheme, which will be available at a reduced Capital Gains Tax rate of 16% represents a significant move towards growing investment in innovative firms and broadening the modes of finance (including angel financing) available to a business in Ireland.
Furthermore, the Key Employee Engagement Programme has been extended to the end of 2025 and, following EU State Aid Approval, the increase in the maximum limit of KEEP shares a company may grant in its lifetime has been increased from €3 million to €6 million from 20 November 2023.
The extension of the Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment, beyond the end of 2023 will prove valuable, considering the ongoing success of this regime and the volume of requests the government has received for an extension of this scheme. The main benefit of the ACA scheme is that it promotes environmentally friendly purchases and provides a cashflow benefit to firms, which may be of particular benefit to SMEs availing of the scheme.
The increase in the rate of the R&D (Research and Development) Tax Credit from 25% to 30% is welcome as it means that any in-scope entities (those with a turnover of greater than €750 m) will be eligible for the same value of the R & D tax credit before the implementation of the minimum effective tax rate. Furthermore, SME companies will be able to retain the full benefit of the increase in the R&D Tax Credit.
The availability of a larger upfront payment of €50,000, along with a rate increase to 30% will boost the attractiveness of our smaller innovative businesses and assist them to compete with their larger counterparts on R&D (Research and Development activities.
An increase to the VAT registration thresholds for goods and services will mean a substantial reduction in the administrative and cost burden for many small businesses across the country.
Broader relief measures in Budget 2024
The extension of the 9% VAT rate on gas and electricity to the end of October 2024 will alleviate some of the pressures faced by businesses as a result of rising energy prices. It must be noted that this reduced rate was originally due to expire on 31st October 2023.
In addition to the measures announced at Budget time, the Business Users Support Scheme for Kerosene (BUSSK), announced in September, offered eligible businesses a once off grant as reimbursement for half of their increased costs during the period from March to December 2022, compared to the same months in 2021.
The temporary excise rate reductions applying to auto diesel, petrol and marked gas oil which were due to expire on 31st October 2023 are being extended until 31st March 2024;
Seed and Venture Capital
My Department, through Enterprise Ireland and its strategic partners, has long identified the need to increase the availability of risk capital to support innovation through the continued development of the equity market in Ireland to achieve a more innovative, commercially viable and sustainable entrepreneurial sector for small and medium-sized enterprises.
Government also recognises that if new companies are not supported at the seed stage, it creates an issue where there will not be enough scalable companies available later in the development life-cycle.
Therefore, there are a suite of supports available to innovative, high potential companies in Ireland, that aim to help them succeed and grow in Ireland.
The Seed and Venture Capital Scheme, operated by Enterprise Ireland, fosters a strong pipeline of high growth, innovative businesses in the Irish economy by increasing the availability of appropriate sources of risk capital for start-up/early-stage businesses with high growth potential at each stage of their development. The current €175 million, five-year scheme is due to expire at the end of this year and officials from my Department and Enterprise Ireland are currently working on developing a future scheme.
The Irish Innovation Seed Fund Programme’s ambition is to support early-stage, high-growth companies in Ireland seeking seed capital to grow their businesses. So far, under this programme, two tranches of funding totalling approximately €55 million has been allocated to two funds for dispersion to innovative, high potential seed companies. Further funding announcements will be made later this year.