12th October 2021: The Irish SME Association (ISME) has expressed its disappointment that the opportunity for major investments are overlooked in Budget 2022. However, ISME will continue to push its tax reform agenda in the future. The major priority in Budget 2022 appears to be in tackling cost of living increases for the lower paid, with which it largely succeeds.
ISME’s summarized notes for Budget 2022:
- Limited in substance with not much consideration for medium to long term economic development.
- Enhancements for the SME sector were limited to the extension of Start-up tax relief and EIIS with changes relating to the later deferred until announcement within the Finance Act.
- Continuation of 9% VAT rate for hospitality is to be welcomed.
- Budget expenditure increases focused significantly on Education, Transport and Social Welfare.
- Standard tax band increased by €1,500
- PAYE tax credit / Earned tax credit increased by €50
- Work from home – 30% of vouched heat / electricity / broadband
- Minimum wages increased to €10.50
- USC second band increased from €20,687 to €21,295 in recognition of increase in minimum wage
- Aviation crew temporary amendments to taxation of salary
- 9% hospitality VAT rate extended to 31 August 2022
- Start-up relief for Corporation tax extended to 5 years (currently 3 years)
- EIIS – Extended for a further 3 years – Wider range of investments funds – Amendments to the criteria and operation of the scheme to be introduced (Finance Act)
- Tax credit Digital Games – 32% of eligible expenditure up to maximum of €25 million per project
- Land tax in zoned areas – 3% tax to encourage release of land to housing within zoned areas
- Pre letting expenses for landlords up to 3 years prior to letting to encourage landlords to let vacant property.
- VRT to increase from 1% to 4% for bands ranging from 9-20
- Battery powered vehicles – €5,000 grant extended to 31.12.23
- Young farmer relief due to cease on 31.12.22 – Gov. looking to extend this and in discussion with EU on state aid implications
- Stock relief – extended 31.12.24
Comment from Jamie O’Hanlon, MD of Avid Partners:
It is unfortunate that another chance to undertake long-needed tax reform has been lost. We hope that the Finance Bill will put more detail behind some of the initiatives announced today, such as long-overdue reform of the EII Scheme.
Jamie O’Hanlon is available for comment on 087 659 9206