Leo Varadkar
Ceist:92 Deputy Leo Varadkar asked the Minister for Finance his views on amending section 21 of the Finance Act 2009 to extend this tax exemption to start up partnerships. [2817/10]
Amharc ar fhreagraThursday, 21 January 2010
Ceisteanna (97)
Freagraí scríofa
I understand that the Deputy is referring to the corporation tax exemption that was introduced for new start-up companies in Section 31 of Finance (No. 2) Act 2008. The provisions of that section provide for relief from corporation tax, for the first 3 years of operation, for companies incorporated on and from 14 October 2008 that commence to carry on a new trade in 2009. The relief is granted by reducing the corporation tax on the profits of the new trade and on the gains from disposal of assets used for the purpose of the new trade to nil. Full relief is available where the corporation tax otherwise payable by the company in respect of any of its first 3 years is €40,000 or less. There is marginal relief where the corporation tax liability is between €40,000 and €60,000. Where the corporation tax liability is €60,000 or over in any of the first three years, no relief is available for that year. The extension of the scheme to companies that commence trading in 2010 was announced in Budget 2010.
The Deputy will be aware of the recommendations of the Commission on Taxation in relation to this exemption. The Commission proposed that the exemption be extended to non corporates but that it should terminate in 2011. The scheme while still only available to corporates continues to be available for three years. Therefore, new start-ups that commence trading in 2010 can continue to avail of the exemption up to and including 2012.
The tax exemption does not apply to partnerships, sole traders or to other non-corporates. It is important that tax reliefs are targeted to the areas which have the potential to provide the best return. The incentive aims to encourage new entrepreneurial activities in the productive sectors of our economy and provide opportunities for increased employment in those sectors. To make it available on a broader basis would in all likelihood make it more costly without delivering a return commensurate with the increased cost.