The group representing Irish accountancy bodies has called on the government to introduce emergency measures for the SME sector in Budget 2021 to help them withstand the impact of Covid-19 in the coming months. The Consultative Committee of Accountancy Bodies -Ireland (CCAB-I) launched its 2021 Pre-Budget Submission to Government today.
Concessions in terms of how the Government will tax Temporary Wage Subsidy Scheme payments and the Pandemic Unemployment Payment are urgently required. For example, if an employee receives €350 per week under the TWSS, this amounts to €7,700 over 22 weeks and is a substantial amount of untaxed income for a worker to deal with at the end of the year. Tax due on these payments should be spread over four years or more to avoid a significant drop in the worker’s take home pay.
The Submission acknowledges the unprecedented supports provided to date, however, warns that in the absence of further extraordinary supports, many SMEs in Ireland cannot survive. Measures proposed in the Submission cover tax supports for self-employed individuals, measures to support SME recovery and tax rule reforms to reflect modern work practices.
Anticipating that many self-employed individuals will not be in a position to pay their income tax liability due in November this year, the Submission proposes the write-down of the first €10,000 of the balance of the 2019 tax liability of self-employed individuals on a targeted basis for those in financial difficulty as a highly effective means of support.
With an eye to supporting entrepreneurship and incentivising investment, among the measures the Submission also proposes are the implementation of the recommendations of the Indecon Report on the Revised Entrepreneur Relief; the tailoring of R&D tax credits to facilitate the economic recovery of the SME sector; the introduction of a digital tax credit for SMEs; and the refining of the Employment Incentive and Investment Scheme (EIIS) rules to generate much needed equity funding for SMEs operating in difficult economic circumstances.
Commenting Norah Collender, Professional Tax Lead, Chartered Accountants Ireland said,
“When we talk about small businesses, we mean local retailers, manufacturers, hospitality, and service providers. They are reeling from the economic impact of COVID-19and face liquidity pressures which could result in business closures without Government support. The tax system is a powerful means of getting supports to SMEs, which in turn always respond positively with increased economic activity.
“The Programme for Government talks about many tax initiatives to help small business which it must follow through on as soon as possible along with extending emergency tax measures introduced by Revenue. Small businesses need to know where they stand so a practical way of doing this is for Revenue to confirm that its emergency tax measures will remain in place for the rest of 2020.
“It’s natural for any Government faced with a deficit to consider cutting back tax supports but such a move will mean the end for many businesses. SMEs account for over 1 million employees, or 68.4% of total employment in the Irish business economy and economic recovery is simply impossible if these businesses don’t get the tax supports they need.”
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