CCAB-I, of which Chartered Accountants Ireland is a member, has made its pre-budget submission to the Minister for Finance. As its title “Tax roadblocks and possible bypasses to assist the domestic economy” suggests, the focus is firmly on the use of tax policy to help stimulate and sustain activity. CCAB-I Tax Committee Chairman Mr Liam Lynch points out in his letter to Minister Noonan that in light of the current economic position, we have taken particular care to assess the Exchequer consequences in making the suggestions.

The suggestions made include:

How the tax benefit of 30% under the EIIS (Employment and Investment Incentive scheme) for rewarding the investor to make a high risk investment is inadequate when coupled with the High Income Earners Restriction and the relief should be removed from the list of restricted reliefs to make it a worthwhile use of an investor's limited resources.

Seed Capital Relief should be amended to allow for a mix of loan and equity investment which can be structured to ensure that the relief is not abused while still allowing the entrepreneur to make a commercially viable investment.

The option for employers to transfer an element of R&D relief to employees as introduced in FA 2012 is a positive development but requires a broader application to lower paid employees and companies in the loss making phase of business development if the relief is to have any real benefit for domestic businesses. We also propose the introduction of a special Income Tax rate of 12.5% on bonuses paid to employees and inventors directly involved in the innovation process. The 2003 base year system should be replaced with a full volume based system to ensure the fair treatment of companies who have shown long-term commitment to R&D investment.

The effective rate of tax of 70% on excess PFT is excessive and should be replaced with a withdrawal option which subjects withdrawals to the taxpayer's marginal rate of income tax.

The Three Year Start-Up Corporation tax relief can be made fit for purpose by extending it to companies in the first three years of the profit making cycle after loss relief has been exhausted. The relief should be amended to include incorporating sole trades and expanding group companies.

We recommend that existing and new foreign owned companies establishing a presence in Ireland should be excluded from close company legislation. This will greatly enhance Ireland's attractiveness for inward investment and remove confusion currently faced by many IFSC companies.

The seven-year CGT exemption for certain property purchases should be extended to include shares which derive their value from property to bring about a sustainable and real stimulus to the property sector.

The Foreign Earnings Deduction should be extended to include countries such as the US, Saudi Arabia, Switzerland, Singapore, Japan and Australia. The SARP (Special Assignee Relief Programme) regime in Ireland is still uncompetitive in comparison with other jurisdictions with whom Ireland competes with for FDI and further amendments are required to ensure that this relief is optimised in Ireland's favour.

The Pre-Budget submission runs to 30 pages and is published on the Chartered Accountants Ireland website www.charteredaccountants.ie under Members – Tax – Representations.