Small firms: The Budget contained a number of measures designed to help small business.
Minister for Finance Brian Cowen announced plans to remove almost 2,200 businesses from the VAT net, at a cost to the Exchequer of €12 million a year.
The Minister said he was making the changes to help develop business generally and small business in particular.
"I am personally conscious of the enormous contribution made to our economy by the many small businesses in the State," he said.
Mr Cowen said he would raise the VAT thresholds for small business from €25,500 to €27,500 in the case of services and from €51,000 to €55,000 in the case of goods. "This will cost €12 million in a full year and remove almost 2,200 businesses from the VAT net," he said.
However, ISME, the Irish small business organisation, which expressed disappointment with the Budget overall, described the rise in the VAT thresholds as a sop to small business and said it did not go far enough.
The lobby group pointed out that it was less than half the threshold afforded to small businesses in the UK.
Mr Cowen also announced plans to help 74,000 small firms by raising the annual tax payment limit below which PAYE and PRSI can be paid on a quarterly, instead of the normal monthly basis, to €30,000 a year.
"This will assist 74,000 small firms at a cash flow cost of €102 million to the Exchequer in 2006," he said.
The Small Firms' Association welcomed the cash flow improvement which would arise from such a change, as well as the changes to the VAT thresholds.
But it was disappointed at other elements of the Budget, including its failure to introduce specific tax reliefs for small business expenditure on research and development.
The Budget also closed two loopholes in the tax system.
The first relates to the deferral of capital gains tax on the sale of a chargeable asset to a spouse or former spouse.
The measure is designed to ensure that Irish capital gains tax is not avoided by people disposing of the asset abroad while being non-tax resident in the State.
The other loophole relates to transactions between related companies, where the main purpose of the transaction is to artificially generate interest charges qualifying for relief under Section 247.
"The proposed restriction will apply to structures whereby indebtedness is created effectively between companies in a group, in connection with the transfer of share ownership from one company to another in that group," according to the documentation accompanying the Budget.
The changes will be introduced in the Finance Bill 2006 and will be targeted to minimise the possible impact on the legitimate commercial use of the legislation.
The car value threshold for business cars is being increased from €22,000 to €23,000 and will apply to capital allowances and leasing charges for new and second-hand cars used in the course of a trade, profession or employment.
