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Irish SMEs Seek Better Tax Treatment Of Self-Employed

by Jason Gorringe,, London

05 January 2016

The Irish Small Firms Association has called for "full tax equalization" between the self-employed and those taxed under the Pay As You Earn (PAYE) system.

The recommendation was made in the SFA's 2015 End of Year Statement. The Association said that the Government should introduce a tax credit for the self-employed and proprietary directors that is equivalent to the existing PAYE credit. The 2016 Budget provided for the introduction of an Earned Income Tax Credit worth EUR550 (USD600) for those with earned income who do not have access to the PAYE credit. However, the PAYE credit is worth EUR1,650.

The SFA also argued for the abolition of the three percent Universal Social Charge (USC) surcharge, which applies only to self-employed persons. It added that the Government should reduce capital gains tax to 20 percent and introduce a ten percent rate for entrepreneurs up to a EUR14m threshold.

Earlier Finance Minister Michael Noonan said the Government will "progressively abolish the USC to reward work and reduce the marginal [tax] rate to no more than 50 percent for all workers," while Prime Minister Enda Kenny has pledged to "complete the tax equalization for the self-employed in the coming years along with other measures to support our job creators" if his party is returned at the forthcoming general election.

SFA chairman AJ Noonan commented: "With a general election on the horizon, the SFA will be calling on the new Government – whatever its composition – to embrace the SFA vision of Ireland as the most vibrant small business community in the world, supporting entrepreneurship, valuing small business, and rewarding risk takers. Concrete steps must be taken in 2016 towards making this a reality."

He added: "2015 has seen a number of significant developments from a small business perspective. Growth is likely to be above seven percent. Unemployment has fallen below nine percent. The Government has acknowledged the discrimination that self-employed people and proprietary directors are subject to in the tax system and begun to address this by introducing a partial tax credit. The marginal tax rate has fallen below 50 percent. From January, consumers will have more disposable income due to reductions in USC."

"If the new Government puts the right policies in place, 2016 will be a great year for the small business sector. A thriving small business community has the potential to create 30,000 new jobs in 2016, reinvigorate towns and villages around the country, and make a significant contribution to the Irish economy."

TAGS: tax | small business | business | Ireland | entrepreneurs | employees | tax thresholds | tax credits | ministry of finance | self-employment | social security | tax reform | trade association | trade | individual income tax

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