Baker Tilly Ireland has outlined its key recommendations for Budget 2025 with a focus on increasing Ireland’s attractiveness for owner-managed businesses and foreign direct investment.
Brendan Murphy, tax partner at the financial, tax, and business advisory services group, has made the proposals with a view to creating a more dynamic and competitive business environment.
Murphy highlights the importance of targeted tax reliefs and incentives to foster growth and sustainability for owner-managed businesses at different stages of maturity.
He proposed a review of changes to the technical adjustments made to Entrepreneurs’ Relief last year to make it more restrictive in certain group situations.
Murphy feels the definition of a group should be reviewed, and that simplifying the criteria would ensure more entrepreneurs benefit from the relief, promoting further innovation and growth.
He further advised that the Key Employee Engagement Programme, designed to incentivise staff, needs significant improvements to become more user friendly.
Comprehensive reform is required to improve employee incentives, helping businesses attract and retain top talent, he said.
A cap of €10m on retirement relief introduced in the last Finance Bill restricts the ability to pass on businesses to the next generation without financial penalties, according to Murphy.
Removing or increasing this cap would make it easier for owner-managed businesses to stay within families and transition to the next generation.
On Capital Acquisitions Tax, Murphy suggested that increasing the gift-free threshold of €355,000 would provide much-needed relief for families transferring assets.
Muprhy also made proposals to improve Ireland’s standing as a destination for foreign directive investment.
Firstly, he suggested simplifying the taxation of participation dividends to reduce administrative burden and make Ireland more competitive.
Additionally, he said a dividend participation exemption for EU trading companies could eliminate unnecessary tax complications.
Murphy also took aim at the “overly stringent” VAT registration process and said streamlining it would improve Ireland’s commercial viability.
Furthermore, Murphy would like to see SARP extended beyond 2025 to help attract high-income earners and key staff from foreign companies, and for high-income tax rates to be addressed to make Ireland more attractive to top talent.
On technology and AI incentives, Murphy would like to see share schemes expanded and tax relief or incentives introduced for organisations focusing on AI.
He said double deductions for AI-elated investments could position Ireland as a leader in the tech sector, and that the government should consider pre-clearance for the R&D Tax Credit.
Finally, simplifying the legislation and onerous rules around Employment Investment Incentive Scheme (EIIS) and angel investor reliefs could encourage more investments into Irish businesses.
Photo: Brendan Murphy. (Pic: Supplied)