Business

Inclusion for the “KEEP” stock option program is only a fraction of the estimates

blank

A tax system introduced in 2018 to help smaller companies compete with multinationals by giving employees shares is having little effect and needs to be overhauled, the government has been told.

Advisors at KPMG said the Key Employee Engagement Program (KEEP), a tax incentive for shares in small and medium-sized businesses, cost €600,000 in 2021, well below the projected cost of €10 million.

“The low uptake of this tax incentive indicates that the rules and conditions underlying the system are overly complex and do not reflect the commercial reality of how SMEs operate,” said Thalia O’Toole, KPMG’s tax director.

KEEP was launched in 2018 to help start-ups and smaller companies attract employees.

It exempts employees and directors from paying income tax, USC, or PRSI on their shares and defers capital gains tax until the shares are sold.

But KPMG said access to the program is complex and costly, with uncertainty over the tax treatment of share buybacks and overly rigid limits on share valuation and the types of companies and workers who can participate in the program.

“A more flexible system is needed to level the playing field for smaller domestic companies that are struggling to attract and retain key workers and cannot match the salaries paid by larger employers,” Ms O’Toole said.

KPMG has made a formal request as part of a Treasury Department review of the program ahead of the next budget.

The ProShare Association of Ireland (IPSA) lobby group also criticized KEEP for being too complex, saying it needs “significant reform” if it is to help smaller firms attract labour.

Ministers have said they are considering changes to how capital gains are treated under the scheme.

The government believes a reform of KEEP is the next step to make Ireland more attractive to start-ups, having extended tax breaks for equity investors and launching a €90m seed capital fund for start-ups in Budget 2022.

KEEP isn’t the only program that has had low adoption. The Special Assignee Relief Program – a partial tax exemption for foreign workers posted to Ireland – was used by just 1,500 people in 2018.

https://www.independent.ie/business/irish/uptake-for-keep-share-option-scheme-a-fraction-of-estimates-41764895.html Inclusion for the “KEEP” stock option program is only a fraction of the estimates

Fry Electronics Team

Fry Electronics.com is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – admin@fry-electronics.com. The content will be deleted within 24 hours.

Related Articles

Back to top button