Why SMEs are the ‘real winners’ in Budget 2022

2 days ago

Minister Paschal Donohoe, TD, at a Budget 2022 press conference. Image: Julien Behal Photography

PwC Ireland’s Susan Kilty believes the latest Budget promotes entrepreneurship, supports growth and creates jobs.

Following another turbulent year under the cloud of Covid-19, Budget 2022 unsurprisingly placed a focus on the areas of digital transformation and remote working.

But while there were no so-called big reveals in the moderately temperate Budget, it was still largely welcomed, particularly for the SME community.

PwC Ireland’s head of tax, Susan Kilty, said this year’s Budget was good for business, with “SMEs and private companies being the real winners”.

“Budget 2022 promotes entrepreneurship, supports growth and job creation,” she said. “At the same time, Budget 2022 has attempted to ease the cost of living increases for many families and consolidate our economic recovery from Covid-19.”

A win for the domestic economy

Ahead of the Budget yesterday (12 October), the Government joined the global political agreement on the future of corporate taxation, meaning the country’s long-contested 12.5pc tax rate will rise to 15pc – but only for large multinational companies.

In his Budget speech, Minister for Finance Paschal Donohoe, TD, said Ireland will continue to offer the 12.5pc rate for businesses with revenues less than €750m. “This means no change for 160,000 businesses employing 1.8m people.”

Kilty said the retention of the 12.5pc tax rate for private businesses is a win for the domestic economy.

“The measures announced in today’s Budget will make it more attractive for entrepreneurs to establish and grow their business in Ireland.”

These measures include:

  • Extending the Employment Wage Subsidy Scheme (EWSS) to April 2022
  • Keeping the reduced VAT rate of 9pc for the hospitality sector until August 2022
  • Extending the temporary waiver of commercial rates for certain sectors
  • Introducing changes to the Employment Investment Incentive scheme
  • The extension of the corporation tax exemption for start-ups

The extension of the EWSS is particularly welcome for employers as it will help avoid a “cliff edge”, said Kilty, although it will close to new entrants from 1 January 2022.

“There will be no changes to the scheme in October and November, however, a dual-rate scheme will operate from December to February. A flat rate scheme will operate in March and April and the reduced employer PRSI rate will no longer be available in this period.”

Kilty noted that the lack of announcements on capital taxes was “a missed opportunity for businesses who are concerned about succession”.

Overall, Budget 2022 was a moderately positive one for Ireland’s SMEs and private companies.

“For entrepreneurs, the domestic business community and SMEs, Budget 2022 includes welcome measures that will help to retain and create jobs,” said Kilty.

“For citizens, it aims to ease the cost of living and consolidate our economic recovery from Covid-19.”

Don’t miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic’s digest of need-to-know sci-tech news.

Jenny Darmody is the deputy editor of Silicon Republic

editorial@siliconrepublic.com