Business expansion:The decision to extend the Business Expansion Scheme (BES) and the Seed Capital Scheme and the increase of the ceilings that apply to them, was broadly welcomed yesterday by business groups.
However, Pat Cullen, the national tax partner with Deloitte, said the doubling of the limit to €2 million per company, was "insufficient to restore the BES system to its former status as a major incentive to the entrepreneurial spirit which exists in small Irish companies."
He said the new limit still lagged well behind the thresholds that applied to the scheme when originally launched in the 1980s.
"For the scheme to be meaningful, an increase in the cap to €25 million, which would allow companies to make the investments required to enable them to develop and allow them to compete internationally, would have been more appropriate."
The schemes were due to expire at the end of this year. Minister for Finance Brian Cowen said they would now continue for another seven years.
As well as raising the ceiling for total BES funding per company from €1 million to €2 million, Mr Cowen also raised the annual limit per investor from €31,750 to €150,000. The scheme allows individuals who make investments to claim the investment against income tax. Mr Cowen said the ceilings had not been increased since 1984. In the case of the seed capital scheme, he increased the individual investor limit to €100,000.
"I am increasing these limits in order to bring vital risk capital to the small business sector," he said. The decisions in relation to the schemes followed consultations with hundreds of small businesses which used the schemes, he added.
Employers' group Ibec and the Construction Industry Federation also welcomed the announcement.
Mark Redmond, chief executive of the Irish Taxation Institute said the institute welcomed "changes which continue to underpin the important role of small business in the Irish economy, in particular the changes on preliminary corporation tax and the extension of the BES and Seed Capital Scheme".
The Irish Software Association, which represents the software sector, welcomed the changes, saying it had "lobbied consistently for the extension of two schemes that support start-up and early stage technology firms. The decision by the Minister is a positive move in supporting the development of an innovative, high-value indigenous technology industry".
