14 Sep 2018 | 01.37 pm
CPA Urges Government To Prioritise SMEs
Fewer new trainees also worries accountancy body
14 Sep 2018 | 01.37 pm
The Institute of Certified Public Accountants in Ireland (CPA Ireland) is urging finance minister Paschal Donohoe to prioritise indigenous SMEs in the forthcoming budget.
Speaking at the organisation’s annual President’s Dinner in Trinity College Dublin yesterday (September 13), CPA Ireland president Cormac Mohan (pictured) also defended Ireland’s corporation tax regime.
“FDI played an essential role in sustaining our economy during the crash and delivering the current recovery,” said Mohan.
“We are once again experiencing renewed attacks on our corporate tax regime from the EU, while the US is simultaneously incentivising companies to invest at home.
“These challenges, coupled with Brexit and potential interest rate hikes, highlight how we cannot rely on foreign companies to support us in the future.”
Mohan also said there was a need to ensure Irish SMEs were treated the same, and not disadvantaged, by government policy.
“It is an unfortunate side effect of the government’s pro-FDI policies that many of the schemes introduced are not accessible to smaller businesses. To address this both the R&D Tax Credit and Entrepreneurial Relief are in need of urgent attention.
“The R&D Tax Credit has been shown to predominantly benefit older, larger and non-Irish firms. The scheme needs to be streamlined, with timelier processing of R&D claims and greater support given to indigenous Irish growth orientated companies.
“Similarly, the Entrepreneur Relief scheme – which offers a reduced Capital Gains Tax rate of 10% on gains of up to €1m – compares very unfavourably with the UK regime, which has a £10m upper limit.
“This has led to entrepreneurs questioning whether Ireland is the best location from which to operate their business, particularly given the proximity of the UK. Improvements to this relief are now long overdue.”
CPA Ireland wants the introduction of a tapered CGT rate, which it suggested should reflect the length of time an individual has held shares in their company, rewarding them for their long-term commitment.
The keynote speaker for the CPA Ireland function was economist Cormac Lucey. He too argued that a focus on indigenous business was the most prudent approach.
“The Irish indigenous firms are focused on a narrow range of export markets in a narrow range of sectors. One in five Irish manufacturing companies export just one product, and close to half of them export fewer than five,” said Lucey.
“Nine out of the top ten products exported by Irish-owned firms are food products. In contrast to the FDI sector, information service account for just 14% of total exports by services firms in Ireland.
“In planning for the future, we must not just reflect on our past success. In parallel with our high-performing FDI sector, Ireland needs an innovative, export-led Irish indigenous sector.”
Mohan also addressed the falling numbers of people choosing accountancy as a career. “The simple facts are that in 2008, there were 4,806 new students registered to the accountancy profession in Ireland, whereas in 2017, that number had reduced to 3,357, or a reduction of approximately 30% in percentage terms.
“As a profession, we need to improve in how we project the attractiveness and positive future of the profession to new entrants.
“The future skills that will drive the profession are consistent with the skills that will shape the future workforce in terms of the skillset required and expected, such as social intelligence, creative and adaptive thinking and communication skills.”