Minister for Enterprise; Tourism and Employment statement on Support for SME's that are not entitled to Reduced VAT in July 2026

The Minister states:

The Government recognises that the cost of doing business has been an issue for firms in recent years, arising from both the wider inflationary trends and Government mandated changes in the form of improvements to working conditions across a range of areas. It is important to note that costs for firms, as measured through the CSO's Wholesale Price Index, are declining, and are down 2.6% in the 12 months to September 2025.

Most recently the Government has taken action to address business costs through the publication of the Action Plan on Competitiveness and Productivity, and the convening of the Cost of Business Advisory Forum, which are both commitments in the Programme for Government.

The focus of the Action Plan is on actions that can be taken to strengthen Ireland's competitiveness and productivity which in turn will lead to improvements in our economic performance. A core theme of the plan is 'Regulating for Growth and Controlling Costs', with 18 actions - including five priority actions - focused on addressing this issue. Key actions areas include Better Regulation - which will decrease regulatory burden for business, addressing Ireland's high legal costs, and improving competition in our markets.

The establishment of the Cost of Business Advisory Forum delivers on the commitment regarding supports for Small Business, Enterprise and Industries. The first meeting of the Forum took place on the 11th of June with representatives in attendance from across Ireland's enterprise sector (including the SMEs) and joined by officials from a variety of State Agencies, Regulators, and Government Departments.

The Forum is tripartite collaboration bringing together a broad section representative bodies spanning multiple sectors as well as the multinational corporations. The purpose is to jointly consider those issues that can lead to higher costs for businesses in Ireland, any associated regulatory or infrastructural issues that merit a changed approach, and those steps that could be taken to mitigate these issues. The Forum is scheduled to report to Government in Q1 2026.

Budget 2026 has also provided an overall package of €9.4bn. €8.1bn has been provided for public spending and €1.3bn for new tax measures. Measures which will benefit SME's include:

• A reduction in the Hospitality VAT rate from 13.5% to 9% from 1 July 2025. • An increase in the rate of the R&D Tax Credit from 30% to 35%, inclusion of R&D employee emoluments, and increase in the first-year payment threshold from €75,000 to €87,500.

  
  

• An increase in the Capital Gains Tax Revised Entrepreneur Relief lifetime limit from €1m to €1.5m.

  
  

• An increase in the Employer PRSI threshold to ensure that employers do not pay the higher rate of PRSI for full-time workers earning the minimum wage.

  
  

• Extension of the Key Employee Engagement Programme (KEEP) scheme to 31st of December 2028.