Promoting innovation and sustainability among SMEs

• Published date: 23 June 2022

"Small businesses have been under a lot of pressure for the past three years as a result of the pandemic and now they have to contend with increasing costs and other disruptions as a result of the war in Ukraine and other factors," she adds. "Our new strategy will help them respond to those challenges."

She points to the importance of the small businesses to the Irish economy and explains that government has a role in supporting the sector. "Small businesses make up 98.4 per cent of businesses in Ireland and they employ nearly half [46.1 per cent] of the private sector workforce. Small businesses also contribute about 47 per cent of gross value add to the economy. We have a number of key policy asks for government and other stakeholders as part of the new strategy."

The first of these relates to the cost of doing business. "Costs are mounting in a few areas and there is the added cost of new legislation and regulations," Magnier explains. "Auto-enrolment pensions, statutory sick leave, minimum wage increases, the right to request remote working are all cost increasing. We are asking government to co-ordinate these measures and pieces of legislation in a planned way so that they are not hitting businesses at the same time. Government should apply the SME test across government departments to reduce the regulatory burden on small business."

Access to finance is a related issue. "There is a need to improve access to bank and non-bank finance for small businesses, boosting competition and reducing the high interest rates paid by Irish businesses compared with those in other EU countries," she adds. "There is also a need to improve competition in the insurance market and address rising employer liability and professional indemnity insurance costs."

Tax and talent come next on the list and the SFA is calling for a reduction in the capital gains tax rate to 20 per cent and an increase in the Entrepreneurs Relief limit to €15 million from €1 million.

"Simplifying the R&D tax credit application process for small businesses is also very important," she adds. "More and more firms are on a digital transformation journey, but the R&D tax credit process is cumbersome, costly, and a heavy burden. Lots of small businesses don't...