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Sage | Budget 2022 – Statement

Statement on behalf Barry Murphy, MD, Sage Ireland, in response to new measures aimed at supporting SME recovery announced in Budget 2022:

Sage Ireland welcomes the news that several essential supports are to be introduced or extended as part of Budget 2022. 

The re-opening of society and the economy’s steady return to full capacity signals a new stage of recovery and renewal for businesses that requires sustained and consistent supports from the government, in particular the Employment Wage Subsidy Scheme – which will now remain in place in a graduated from until the 30th of April 2022.

The government’s decision to extend the 9% per cent rate of VAT in the tourism industry to until August 2022 is also a welcome and necessary development in support of the industry. The reduced VAT rate will support the recovery of one of the hardest-hit sectors and help drive the tourism economy to its pre-pandemic levels. Additionally, the €60 million which is being allocated to extend the commercial rates waiver for the last quarter of this year is a positive move for businesses. However, we had hoped to see a guarantee in place for businesses across all sectors, with today’s announcement of the waiver applicable only to businesses in the hospitality, arts, and certain tourism related sectors.

With the extension of the Employment Investment Scheme to three years and with the scheme now opening up to a wider range of investment funds, this will ensure more opportunities are in place for a more dynamic and resurgent environment for SMEs and start-ups, to sustain their business and drive growth post-pandemic. The extension of the Section 486c corporation tax relief to five years instead of three will help provide greater certainty to recently established companies and to those who are seeking to start a business as we recover from the pandemic. With tax relief for businesses and entrepreneurs, we had hoped for a reduction in Capital Gains Tax with today’s Budget to make Ireland a better place to do business post-pandemic, which we see as a missed opportunity.

While the financial supports and measures announced are positive for businesses, at Sage we are particularly pleased to see the introduction of an additional €17 million which is being allocated for once-off Covid capital enterprise supports in 2022, which can be used by businesses to invest in newer technologies and increased automation. Further, we welcome the provision of €50 million for further Business Continuity Supports for businesses re-emerging from the pandemic. As many of our customers pivoted their business out of necessity during the pandemic, the need to continue to drive digitalisation is recognised among businesses. With this in mind, we welcome the announcement of the new Digital Transition Fund to encourage the development and adoption of data analytics and AI among businesses and we look forward to further details on access to this fund. The importance of supporting digitalisation cannot be underestimated as small businesses strive to maintain competitiveness post-pandemic. 

Finally, while revealed prior to today’s Budget announcement, we welcome the clarity provided by the Government last week on Ireland joining the new OECD International Tax agreement, and that the vast majority of businesses operating across Ireland with lower annual revenues than €750 million will see no change to their current rate of corporate tax. We also welcome that certainty has been given to multinationals with higher annual revenues, in that their new corporate tax level has been set to a precise rate of 15%. 

Budget 2022 marks a critical moment for SMEs and local businesses as they continue to strive to recover from the impacts of the pandemic. The measures announced address the financial challenges brought upon businesses by the pandemic, however the lack of movement around the Capital Gains Tax and the lack of an update on the Key Employment Engagement Programme are areas of concern for Irish SMEs 

Despite this, we are encouraged by today’s announcement that the Irish economy will continue to rebound, and Irish SMEs will be at the forefront of the economy’s regeneration. 

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