Delay has cost up to 1,000 jobs as 75,000 emigrate
Denis Naughten TD has called on the Taoiseach to intervene to ensure a vital Government initiative to get up to €125m into companies and create 1,200 jobs/year becomes operational as soon as possible.
Speaking in the Dáil this morning (Wednesday), Denis Naughten revealed that EU approval for the employment incentive scheme — which was announced in last December’s Budget – was only sought in June despite Minister Richard Bruton’s report in April stating that it was expected to have EU approval within weeks.
The Employment and Investment Incentive Scheme, which is focused on supporting job creation in the country’s 230,000 small and medium sized enterprises which employ 900,000 people, would secure vital investment to help these companies expand.
“Last April, Jobs Minister Richard Bruton announced an employment strategy which included this important measure and stated that it was expected to have EU approval within weeks. However, it has now been revealed that a formal application was only submitted by the Department of Finance in June so instead to the initiative creating an estimated 1,000 jobs over the period, 75,000 people have left the country,” stated Denis Naughten.
“This delay is hindering the job creation incentive scheme, a scheme designed to get cash into businesses which will form the cornerstone of our economic recovery and job creation strategy.”
Deputy Naughten called on the Taoiseach to ensure that Government re-doubles it efforts to get the required EU approval for this support, following the serious delay caused by inaction within the Department of Finance.
“Without our SME sector growing and creating jobs, our country will face a further decade as an economic zombie,” he stated. “Every business in Ireland today is struggling in trying to get access to cash to invest in their business, and this is a significant barrier to job creation. While banks are lending, the conditions mean that you nearly have to be able to prove that you don’t need the money before they will release it so this measure is vital.”
Dáil reply: 0
To ask the Minister for Finance when proposals were submitted to the EU commission for approval of section 22 of the Finance Act 2013; the reason for the delay in obtaining approval; when it is envisaged that approval will be obtained; and if he will make a statement on the matter.
* For WRITTEN answer on Wednesday, 25th September, 2013.
Ref No: 39907/13
Minister for Finance ( Mr Noonan) : The Employment and Investment Incentive (EII) is a tax incentive which provides income tax relief for investment in certain corporate trades. Relief is initially available to an individual at 30%, with a further 11% tax relief available where it has been proven that employment levels have increased at the company at the end of the holding period. The EII commenced on 25 November 2011. Prior to this the Business Expansion Scheme (BES) was in operation.
As part of Budget 2013 I announced a 10 point tax reform plan to help small business. One of the measures in this plan was the extension of the EII from its current expiration date of the end of 2013 to the end of 2020 in order to provide certainty to investors and companies. As the EII is a state aid scheme, the approval of the European Commission is required. Accordingly, an application was made to the European Commission in June to extend the EII until 2020.
Officials continue to engage with the Commission in relation to the application. However, at this stage, it is not possible to indicate when the approval of the European Commission will be forthcoming. I have been assured that the extension will be implemented, as soon as possible, once approval has been received.
In addition to the extension of the scheme, I also announced the inclusion of hotels, guest houses and self-catering accommodation in the EII, subject to certain conditions. This amendment did not require the approval of the European Commission and is currently available to qualifying businesses.
Summary of Employment and Investment Incentive (EII)
The scheme allows an individual investor to obtain income tax relief on investments up to a maximum of €150,000 per annum in each tax year up to 2013. Relief is initially available to an individual at 30%. A further 11% tax relief will be available where it has been proven that employment levels have increased at the company at the end of the holding period (3 years) or where evidence is provided that the company used the capital raised for expenditure on research and development. (This additional 11% will not be subject to the high earners restriction). An investor who cannot obtain relief on all his/her investment in a year of assessment, either because his/her investment exceeds the maximum of €150,000 or his/her income in that year is insufficient to absorb all of it, can carry forward the unrelieved amount to following years up to and including 2013, subject to the normal limit of €150,000 on the amount of investment that can be relieved in any one year. Section 22 of the Finance Act 2013 provided for the extension of the scheme to December 2020. However this is subject to a commencement order by the Minister for Finance.
Budget 2013- 10 POINT TAX REFORM PLAN TO HELP SMALL BUSINESS http://budget.gov.ie/budgets/
Government manufacturing jobs plan: http://www.forfas.ie/