Fears of revenue problems and bureaucracy have slowed SMEs in claiming R&D tax credits

Fears that claims for R&D tax credits will fall foul of tax commissioners are one of the reasons small businesses believe SMEs are not taking up the scheme more.

The Irish Tax Institute (ITI) conducted a survey of its members – and the two main reasons for the low participation of SMEs were the level of documentation required to claim tax credits, followed by concerns about monitoring the ‘FISC administration. .

In a submission to a public consultation on the R&D tax credit, the ITI said: “We know from feedback that there is a certain level of anxiety amongst businesses about the possibility that Revenue subsequently contests R&D tax credit claims.

“While verification of taxpayer claims is an integral part of a self-assessment system, it is important that tax compliance interventions are
proportionate and conducted in a timely and efficient manner – in the interest of all parties.

The ITI also recently presented its pre-budget submission, in which it increased the tax “burden” on middle and upper income earners.

“The ITI is aware that revenues will need to be increased to pay for the improved public services to which the government has committed.

“Good public services contribute to national competitiveness. But there is a balance to be struck, and the Institute’s firm view is that the tax burden on middle and upper incomes is a threat to Ireland’s competitiveness in today’s highly mobile international labor market.”

He said it is the long-standing position of the ITI that all wage earners should contribute to the Exchequer according to their means.

But the ITI suggested the government should “lighten the burden on middle-income earners”. Such a move would make Irish staff
competitive taxation at the international level and would encourage work.

He said personal tax regimes will become increasingly important for companies making international investments.

“More generally, a broader mix of the tax base would alleviate the current overreliance on economically regressive labor taxes. It would also be more durable and robust in the event of economic shocks.

He said he thought more money should be taken from indirect taxes.

“We believe that the possibilities of extending existing environmental taxes should be explored and that the zero rate of VAT should be reviewed to ensure that Irish rates are in line with EU rules.”