Ireland Must Incentivize Entrepreneurial Activity

by Jason Gorringe, Tax-News.com, London

28 September 2010

A new report published by the Certified Public Accountants (CPA) Ireland has urged the government to conduct a review of the taxation of entrepreneurial activity in Ireland, to foster new start-ups.

The CPA’s ‘Entrepreneurship Report’, launched by Batt O’Keeffe, Irish Minister for Enterprise, Trade and Innovation, supports government efforts to aid small businesses, including through plans to introduce a loan guarantee scheme, but calls for state support to be extended to all job-creating activity and not those engaged in manufacturing or exporting, and a shift in tax rates to support entrepreneurial activity.

The CPA's report recommends:

• The development of a ’National Entrepreneurship Strategy’ by the government in consultation with the business community;
• Equal tax and social welfare treatment for self-employed people;
• A new tax incentive to allow private investors to write off investment losses in start-up enterprises against income tax;
• An increase to value-added tax thresholds in line with those in force in the UK.
• That the government carry out a ‘Regulatory Impact Assessment’ before the passing into law of new legislation; and
• That City and County Enterprise Boards should be maintained in some form, and their role expanded.

“This is the first independent report of its kind which has addressed the specific issue of entrepreneurship in Ireland”, said Geoff Meagher, President of the Institute of Certified Public Accountants. “We have not only taken into account the views of our own members but we have consulted a variety of stakeholders in the entrepreneurship process including state bodies, business representative organisations, academia, and of course entrepreneurs themselves. This has given us a full 360 degree view of the climate and culture which exists for entrepreneurship in Ireland at present.”

According to Meagher, the report found the climate for entrepreneurship in Ireland to be positive but challenging. “Much has been done to improve the climate and culture for entrepreneurship in Ireland over the past 20 years but the economic downturn is presenting fresh challenges for entrepreneurs”, he said. “Credit is almost impossible to come by, state supports can be difficult to access and are very narrow in focus. Overall there is a lack of encouragement for people to take the entrepreneurial path should they become unemployed. These and other issues require action not only by government but by the whole enterprise community in order to create the conditions in which entrepreneurship can flourish.”

“The most encouraging finding of the report is the fact that entrepreneurship is alive and well in Ireland and we have a solid base to build upon as we work towards our shared goal of economic recovery,” added CPA Chief Executive, Eamonn Siggins. “The report makes many no cost or low cost recommendations to government and state bodies on how conditions can be improved for entrepreneurs in Ireland. It also makes some recommendations for the banks and business generally. We have circulated the report to the relevant government ministers, departments and agencies and other stakeholders, it is our hope that its contents will be taken into account when future policy decisions relating to entrepreneurship are made.”

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