ACOI members call for ‘digital tax credit’ measures in budget
Association of Compliance Officers survey finds more support for digital transformation than wage subsidies
Published 13th October 2020 by TechCentral.ie
Funding in the form of a digital tax credit to help businesses who increased IT spend due to Covid-19 has emerged as the most impactful change the Government could make in Budget 2021, according to a new survey by the Association of Compliance Officers of Ireland (ACOI).
The survey of 300 Association members, many of whom are compliance leaders in large financial organisations around the country, found that 26% of respondents felt such a measure would be the most effective way the Government could help businesses.
Other popular measures were greater access to credit (21%); a longer-term employee wage support scheme (19%); and funding for training and retraining of staff within organisations (19%).
“Many of our members, and indeed businesses around the country, have had to scale up their technical capacity and upgrade their IT resources for staff hugely as a result of the sudden shift from office to home-based working in response to the Covid-19 pandemic, and a cessation or at least alteration of face to face interaction with clients and customers,” said Michael Kavanagh, CEO of ACOI. “This has prompted the need for more hardware such as laptops and computers, for spending on increased online presence in terms of website development and customer service management, for greater amounts of online and cloud storage, and for increased investment in cyber security. Tax credits for much of these costs are spread over many years whereas the expenditure is immediate, and for many businesses they come at a particularly tough time. That members are calling on the Government to address this issue in the Budget and help them to fund these investments is unsurprising in the context of how much many have been forced to pay out.
“The findings also show that providing greater access to credit is a big priority amongst businesses, with an additional 21% believing this measure to be the most impactful the Government could make. Businesses are facing their toughest time yet as we head into nationwide Level 3 restrictions. Those businesses that survived the first lockdown now have to endure a prolonged threat over the winter months, with the vital Christmas trading period looking increasingly bumpy given the tighter restriction on trade and movement. Businesses must be able to access the capital they need in order to stay afloat – if they can’t tap into vital credit to pay their rent, bills, or payroll – it could result in worker layoffs, closures, and even bankruptcy in some cases.”
The ACOI survey also asked what key measures Government should take to promote stability in the financial services sector/the economy. The most popular suggested measure was the creation of incentives to encourage consumers to spend more (41%) followed by providing further grants to struggling businesses (27%), and cuts to personal taxes (23%).
Kavanagh continued: “When it comes to how we can even attempt to stabilise our economy, 41% of respondents to our survey called for the introduction of spending incentives for consumers. Stimulus policies in the form of spending incentives have been popular around the world in response to lockdown restrictions, with the aim of such measures being to stimulate the economy and get the flow of money going again by boosting the demand for goods and services. The Staycation tax credit is the only such incentive we’ve seen so far and while the first month will be a damp squib, it should make a meaningful difference when Level 3 restrictions are reduced.
“Assisting businesses through the provision of increased financial support measures – whether directly through credit facilities or indirectly through tax measures for businesses and/or consumers – will be vital to help get businesses through the winter. With much of our Christmas shopping likely to move online this year, investment in a digital presence is more pressing than ever, and our member survey highlights a clear call for greater assistance with that transition. Whatever measures are or are not introduced in Budget 2021, it certainly will be an important part of the roadmap ahead in mitigating the worst effects of this pandemic for the economy.”