Dáil Éireann Debate, Tuesday - 21 April 2026
280. Deputy Tony McCormack asked the Tánaiste and Minister for Finance the progress made to date in implementing the taxation measures introduced in Budget 2026 to enhance the competitiveness and sustainability of small and medium-sized enterprises; the details of any further targeted supports under consideration in advance of Budget 2027; and if he will make a statement on the matter. [25714/26]
View answerThis Government recognises the important role small and medium enterprises (SMEs) play in the Irish economy and this is reflected in Budget 2026 which contained tax relief measures amounting to over €1 billion in supports to businesses and entrepreneurs including SMEs. These measures take effect in the Finance Act 2025. The measures which are of benefit to SMEs are broad based and not just SME specific but are available and applicable to the SME sector.
Budget 2026 included:
• A reduction in the VAT rate on food and catering businesses and for hairdressing services from 13.5 percent to 9 percent. 99% of businesses operating in these sectors are SMEs. This measure will take effect from 1 July 2026.
• An increase in the rate of the R&D corporation tax credit to 35 percent and in the first-year payment threshold amount from €75,000 to €87,500. This change in threshold will be of particular benefit to companies carrying on smaller R&D projects.
• An increase in the Revised Entrepreneur Relief lifetime limit from €1 million to €1.5 million for disposals made from the 1st of January 2026, supporting entrepreneurs including those in the SME sector.
• A new exemption from the 1% Stamp Duty on acquisitions of shares in Irish registered companies, available for companies with a market capitalisation with a threshold of €1 billion. This measure took effect on 1 January 2026.
This Government is committed to enhancing the competitiveness and sustainability of Irish SMEs. For example, the Action Plan on Competitiveness and Productivity was published in September 2025 and work is underway on progressing the 85 recommendations including fiscal supports for enterprise.
Key tax incentives that encourage investment in SMEs include the Employment Investment Incentive (EII) and the Angel Investor Relief. The EII and Angel Investor relief are schemes that operate under the EU State aid General Block Exemption Regulation (GBER). The EU Commission is currently undertaking a revision of the GBER. A draft of the revised GBER was published at the end of February and is subject currently to a public consultation. The final draft to be adopted is expected by Q4 2026. Officials are examining the current draft and the potential impacts on the incentives.
It is important to note that, any decisions regarding taxation measures are made in the context of the annual Budget and Finance Bill processes, at the appropriate time, and having regard to the sound management of the public finances.
Such decisions also must have regard to the sound management of the public finances and my Department's Tax Expenditure Guidelines. The guidelines make clear that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures, where a tax-based incentive is more appropriate and efficient than a direct expenditure intervention.
