Ireland’s Small Firms Association recently argued that better supporting SMEs through the tax system would mitigate the country’s over-reliance on revenues linked to foreign direct investment.
According to SFA, Ireland’s competitiveness is under threat. It therefore argued that the Government needs to take steps to “de-risk our economy from over-reliance on FDI and seize an important opportunity to future-proof our economic model.” It said that the Budget needs to provide certainty to small businesses.
One of SFA’s priorities is a reduction in capital gains tax (CGT). It recommended a reduction in CGT to 20 percent across the board (pointing out that, at 33 percent, Ireland’s CGT rate is one of the highest among developed economies), in order to make investing in a business in Ireland more attractive. It also argued for an increase in the lifetime limit for gains under the CGT … Read More »
The United Kingdom tax authority has been accused of going after low-hanging fruit in its quest to narrow the tax gap. Accountancy firm UHY Hacker Young reported last month that HM Revenue and Customs collected almost GBP500m (USD660m) in additional revenue from its compliance investigations in 2016/17, a five percent increase over the previous year. And Roy Maugham, a tax partner at UHY, is clear that HMRC is focusing its compliance activities on small firms because they are “an easier target than many larger businesses.”
He also emphasized that such audits can have a disproportionately detrimental effect on these taxpayers. “The cost of tax inquiries for SMEs can be high, and the investigations disruptive,” he noted, adding: “Small companies may not have the necessary resources to bounce back.”
Maugham suggested that the best way for small business to avoid being in HMRC’s … Read More »
It is an unfortunate fact of modern life that small businesses suffer most from adversarial tax systems, because most can’t afford to employ armies of tax attorneys to fight their corner, or expend the time necessary to defend themselves.
Indeed, as any small business owner who has been audit will no doubt testify, these procedures can be extremely stressful. The House of Representatives Small Business Committee held a hearing on this very matter last year. It heard how in some cases small firms had shut down as a direct consequence of an audit. As Steve Chabot, the panel’s chariman, observed in his introductory remarks: “I know members of this Committee have heard from constituents who were audited so aggressively by the IRS that they had to close their doors. Others are engaged in protracted audits that seem like vague fishing expeditions, … Read More »
Things can get very complicated very quickly when governments start introducing multiple VAT rates and exemptions and try to pick winners with the VAT system. And unless VAT legislation is watertight and drafted in such a way that it is not open to interpretations, all sorts of absurdities can ensue.
The United Kingdom, in particular, has history in this area. In the UK, food is generally zero-rated, but some foods are “luxuries” or are considered “catering” and subject to the standard rate. So, in the not-too-distant past, we have seen long-running battles between HM Revenue and Customs (HMRC) and taxpayers over the classification of teacakes (a cake or a biscuit?), Pringles (a potato chip or not a potato chip?) and pasties (hot takeout food, or merely “food”?).
More recently, HMRC was forced to issue a whole brief for publishing houses, wholesalers and … Read More »
China announced a further package of tax cuts to benefit SMEs, extending previous reductions in income tax and VAT exemptions. That’s presumably good news for would-be businesspeople, although it’s difficult to tell from a distance how far Chinese entrepreneurs are tormented by bureaucrats, as is the case for small businesses in Europe and America. All governments make great play of their support for SMEs, but in most countries the reality is very different from the hype, at all levels of existence. The average Western small business would definitely regard its central government, its local government and the tax authority as being a well-armed and vindictive set of bandits determined to prevent it from succeeding in the market-place.
The panoply of difficulties confronting a would-be start-up in most countries includes at least the following:
a raft of administrative requirements (register your business, comply … Read More »
Good to see that the new, pro-business Australian Government is off to a promising start, announcing that it will attack the tendency of the tax authority to put all kind of roadblocks in the way of entrepreneurs who want to start up in business. Australia’s Treasury department is not alone in detesting small businesses; most Finance Ministries regard entrepreneurs and the self-employed as little more than thinly disguised conspiracies to rob the State, and most Finance Ministers won’t be happy until they have criminalized all tax-payers, either because they’re too poor to pay the imposts demanded of them and therefore cheat, or because they are in business, with the Government as the enemy at every turn, or because they have moved “offshore.” The situation is especially taxing for entrepreneurs when there is a left-wing Government in cahoots with the tax … Read More »