Yes the VAT increase of 2% came to pass, if only for products and services on 21%, and it’s not going to be an easy time for smokers with 25c going on the packet of cigarettes but there was plenty of good news in Michael Noonan’s budget speech. Top of the list should be start-up companies who will be able to use the first €100,000 in R&D spending as a tax credit. As serendipity would have it, I happened to have KPMG’s most recent report on companies’ attitude to R&D tax credits to hand, and it makes for interesting reading.
Conducted via telephone poll in August 2011, KPMG’s report paints a picture of a business landscape largely oblivious to its entitlements for R&D tax credits. According to the stats only 18% of companies ever claimed credits, and only 56% knew to look for them at all. Larger companies were also more likely to seek credits (22%) and overall fewer companies were claiming credits than were looking for R&D grants (29%). KPMG cited a lack of awareness that credits for R&D even existed but today’s announcement will change for the better.
More good news for start-ups starting to trade in 2012, 2013, 2014 as they will be exempt from corporation tax for three years and, as expected, the famous 12.5% rate remains.
Other points, like the removal of tax relief on absentee workers, changing of bands on the universal social charge and the introduction of a property charge have been common knowledge for weeks and offered no surprises. From the perspective of the tech sector, tax credits on R&D will encourage start-ups to be bolder in their ideas and help attract foreign investors.
All things considered, that’s not a bad result.
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