SMALL BUSINESS:Brian Cowen introduced three new initiatives to support small and medium companies, measures which will cost €16.5 million next year and €27 million in a full year. The first measure increases the small company corporate tax liability threshold for the payment of preliminary tax on the "simpler" prior-year basis to €200,000 from €150,000.
This refers to the system under which small companies have the option of paying their preliminary tax at the lower of 90 per cent of the final liability of the current accounting period, or 100 per cent of the final liability of the previous accounting period. The change will be effective from preliminary tax payment dates arising after December 5th.
The second measure will increase the corporation tax liability threshold for new start-up firms at or below which they do not have to pay preliminary tax in their first accounting period. Effective from yesterday, this threshold will also be increased to €200,000 from €150,000.
The third measure will have the effect of taking about 2,700 businesses out of the VAT system.
This will be achieved by increasing the small business Vat registration threshold for goods to €70,000 from €35,000 and increasing the VAT registration threshold for services to €75,000 from €37,500. The change will take effect on May 1s.
The Small Firms' Association (SFA) said it fully endorsed measures aimed at "further reducing the administrative burden of complying with taxation". It also welcomed an extension of the Business Expansion Scheme (BES).
Under that change, the requirement that recycling companies must have received grant assistance before availing of the BES is to be replaced by a requirement that their business proposals must be certified by an industrial development agency or County Enterprise Board before they avail of the scheme.
The association said no small business could afford to allow its costs to spiral to the same extent as the 8.2 per cent increase in current expenditure.
Mr Cowen also signalled that he will introduce a measure in the Finance Bill to make permanent a "transitional" arrangement which relaxes the interest charge on underpaid preliminary corporation tax for certain companies whose accounts are based on IFRS accounting standards.