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KPMG today published a report which outlines a range of measures to revive the Irish economy and kick start growth and jobs.

Key measures to revive the Irish economy and kick start growth and jobs

  • New report from KPMG focuses on kick starting growth and jobs
  • Zero rated VAT for certain affected businesses
  • Refund of tax paid in prior years for losses in 2020
  • Waiver of rates for 2020
  • Reintroduction of 9% VAT rate for tourism
  • Incentives to encourage private capital investment in the recovery
  • Ensure Ireland continues to be a location of choice for foreign direct investment

Initiatives to support businesses and the economy

 The report was recently submitted to Government for consideration. The report highlights the fact that businesses which have been forced to close due to the Covid-19 pandemic and Government restrictions have been carrying significant fixed costs but with little or no revenue streams. As the economy gradually re-opens they also have an additional cost burden to ensure they are Covid-19 compliant such as Personal Protective Equipment, more intense cleaning costs and new fixtures and fittings to deal with social distancing. Reduced capacity will also be a key factor affecting the ability of many businesses to generate revenues.

Against this background KPMG is proposing a range of initiatives to support businesses and the economy. These initiatives are focused on two distinct approaches: rebooting the economy and driving growth and jobs.

Amongst the initiatives to revitalise the economy KPMG are recommending:

  • Zero rated VAT for businesses such as restaurants, cafes, bars and non-food retail
  • Expansion of loss relief provisions to allow losses in 2020 to be offset against profits in previous 5 years, boosting a business’s cashflow.
  • Waiver of rates for 2020
  • Reintroduction of 9% VAT rate for tourism
  • Changing the Government’s Employment and Investment Incentive Scheme and CGT rules to encourage business owners and other investors to inject capital into affected businesses
  • Expanding liquidity supports for SMEs and ensuring speed of deployment
  • Expanding the definition of SMEs so certain affected larger Irish companies can access supports if required.

Included in the initiatives to drive growth and jobs are:

  • Ensure Ireland continues to be a location of choice for Foreign Direct Investment 
  • Embed digitalisation to make the economy more resilient and more productive
  • Further development of accelerator hubs for start-ups via linkages with multinationals and universities 
  • Capitalise on opportunities and strategic advantages for Ireland related to the sustainability and green agenda

Commenting on the report the Managing Partner of KPMG, Seamus Hand, said “As Government moves to re-open the economy it is vital that businesses are supported in a way which helps revive the economy initially and then kick starts growth and jobs. If unemployment levels are to be minimised and the economy is to have a chance to recover quickly, it is essential that businesses whose viability has been put at risk by their closure are given the lifeblood they need to survive the critical period ahead.

The revival measures suggested are intended to ease immediate cash-flow concerns faced by businesses that have suffered a significant decline in revenue due to the Covid-19 pandemic.  The measures are designed to support ‘affected businesses’, the definition of which could be linked to the criteria used by Government in relation to the Temporary Wage Subsidy Scheme. In framing our suggestions we fully understand and appreciate the unprecedented challenges Irish society and the Irish Government has had and will continue to have in responding to the Covid-19 pandemic. 

It is too early to say precisely what impact Covid-19 will have in the medium to longer term on the way society will work and how business will be done domestically and internationally. Because of this we will need to be adaptable and flexible and make strategic investments in areas that will allow the country to respond to the challenges and opportunities that will arise.”

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