Dáil Éireann Debate, Friday - 16 September 2016
374. Deputy Niall Collins asked the Minister for Finance if he will introduce an employer pay related social insurance tax credit for new hires for micro-businesses, in order to increase employment; and if he will make a statement on the matter. [26430/16]
Amharc ar fhreagraThe issue of supporting micro-businesses, which are often also businesses in the early stages of their development, needs to be considered in the broader context of the multitude of expenditure and tax instruments which can assist these enterprises to succeed and grow.
For example, the 3-year start-up relief from Corporation Tax allows qualifying companies to obtain full relief on their corporation tax liability in the first three years of trading. The value of the relief is linked to the amount of employer PRSI paid by the company, in order to link the scheme with the creation of jobs. This relief was first introduced in 2009 as an incentive to encourage new business start-ups creating additional employment. Budget 2016 extended the tax relief for start-up companies for a further three years so that companies which commence a new qualifying trade in 2016, 2017 or 2018 can obtain the a corporation tax relief in their first three years of trading.
Microenterprises would be able to avail of the Employment and Investment Incentive (EII), which provides tax relief for investors who invest in qualifying Small to Medium Enterprises. All small and medium companies less than seven years old in qualifying trades, in all geographic areas of the country, can use the incentive, as can certain older companies which are expanding into new products or geographic markets.
Alternatively, the Start-Up Refunds for Entrepreneurs scheme provides a refund of tax paid in the previous 6 years to those in PAYE employment or those who have recently been made unemployed, where they invest funds into a new company.
The Start Your Own Business scheme provides for relief from Income Tax for long term unemployed individuals who start a new business as a sole trader. The scheme will provide an exemption from Income Tax up to a maximum of €40,000 per annum for a period of two years to individuals who set up a qualifying business, having been unemployed for a period of at least 12 months prior to starting the business.
A sector-specific incentive for micro-breweries also exists, which allows relief of up to 50% of the national rate of excise duty to micro-breweries producing 30,000 hectolitres or less per annum.
With regard to PRSI, in Budget 2016 I introduced a new tapered employee PRSI credit in order to smooth entry into the PRSI system for employees who were previously affected by the PRSI 'step effect', thereby removing a barrier to provision of additional hours of labour by affected employees. I also increased the point at which an employer becomes liable to pay the higher rate of employer PRSI by €20 per week in order to mitigate the cost to employers of the increase to the national minimum wage.
The Deputy will also be aware that the Department of Social Protection provides financial support to companies engaging additional employees through the JobsPlus scheme. JobsPlus offers differentiated levels of subsidies to employers to encourage them to focus recruitment on jobseekers who are longer term unemployed. There is no limit on the number of new recruits per employer, and start-up employers may also avail of the scheme, on production of evidence that the business has commenced operations.
I am of the view that the above reliefs and supports are more appropriately targeted at supporting small enterprises and increasing employment than an employer PRSI credit of the nature proposed by the Deputy.
