• R&D tax regime improvements required
• More equitable regime on late payments needed
• Cap on pension funds should be increased

Over 97 per cent of chief executives believe that the Minister for Finance should use this week’s Budget to introduce incentives to encourage entrepreneurs to set up or expand their businesses in order to counter the perceived over-dependence of the economy on the property sector, according to a Deloitte survey.

Padraig Cronin, Tax Partner, said: “Property incentives have had a major impact in attracting funds into the improvement of infrastructure. Incentives should be introduced to ensure that there is indigenous industry in Ireland to take its place once this work is complete.”

The survey of 96 CEOs, which was carried out last month, also found that over 94 per cent of chief executives believe that changes in the Research & Development (R&D) tax regime are required. Joan O’Connor, Tax Partner, said: “This is certainly consistent with the message that we as tax advisors have been giving to the Revenue and we look forward to changes which would make this model more workable for business.”

Addressing the imbalance in the interest regime on tax payments – 12 per cent is paid on tax paid late, but only 4 per cent is payable by the Revenue on refunds where it delays the repayment by more than six months - over 80 per cent of chief executives support the view that the Minister should introduce a more equitable regime in his Budget. 

The Finance Act 2006 removed the remittance basis of taxation for many foreign people working in Ireland. This has had the effect of adding considerable additional administrative costs for many companies who have contributed to Ireland’s success in recent years. Three out of four of the chief executives surveyed expressed the view that the Minister needs to bring in some ameliorating legislation to bring the tax cost of these administrative arrangements into line with our competitors for international mobile investment.

In order to assist Ireland in its task of establishing itself as a holding company location for multinational groups, nearly 74 per cent of chief executives believe that the lack of exemption for dividends received from the overseas entities put Ireland at a disadvantage.

The final issue on which the chief executives passed an opinion on relates to the cap on pension funds introduced in Finance Act, 2006. Some 56 per cent expressed the view that the Minister should introduce a higher cap for senior executives who do not own more than five per cent of their company.

Commenting on the survey results, Pat Cullen, National Tax Partner, Deloitte, said: “The survey shows that Irish chief executives have serious issues with some important aspects of the Irish tax regime. It is hoped that the Minister announces some changes to deal with these issues either in the Budget or in next year’s Finance Act.”

Commentary on the Budget will be available on Deloitte’s dedicated website: www.deloitte.com/ie/budget.

Click here for a more detailed summary of the results.

ENDS

December 4 2006

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