Developer urges tax breaks to incentivise entrepreneurship

Tax breaks should be offered to incentivise entrepreneurship, property developer Michael O'Flynn has said.

Speaking at the Banking & Payments Federation's national conference on Financing Growth and Entrepreneurship, Mr O'Flynn said: "Tax breaks would make great sense as we'd do anything in Ireland to avoid tax."

The Cork businessman said tax breaks worked as good incentives, saying he built student accommodation in 1990 which might not have been built if it weren’t for tax breaks.

However, he said he was unsure how the tax breaks relating to entrepreneurship could be policed or managed “considering how creative Ireland can be”.

Mr O’Flynn, who is aiming to build 10,000 homes over the next seven to eight years after putting together a €400 million funding package to relaunch his O’Flynn Construction Group, said property development was a key part of any economy and was more important in a recovering economy.

He said banks wanted planning certainty now, and no one could blame them for that. But he also said “planning has become a lot more complicated than it should be”.

The conference also heard a capital gap needed to be addressed in recognition of the relative weakness of the balance sheets of some businesses due to the erosion of retained earnings or the build-up of legacy debt.

Equity investment

BPFI president

Bernard Byrne

said the federation had proposed the introduction of an allowance for corporate equity as one possible way of addressing the capital gap.

He noted how the tax treatment of equity investment and debt financing differs in Ireland: debt financing benefits from the tax deductibility of interest payments.

“By combining the tax deductibility of actual interest costs with a deduction of a notional return on equity, the allowance for corporate equity proposal could be a useful tool in helping SMEs in particular to invest equity in, or attract equity into, their businesses.”

He said this approach appeared to be working in Portugal, Italy and Belgium, so it could also work in Ireland.