Private and domestically-owned businesses

KPMG insights – our view

It was encouraging that the minister introduced tax measures with a clear focus on supporting Irish businesses. He acknowledged the important role Irish businesses and entrepreneurs play in the economy, particularly in driving productivity, incomes, and living standards. His reference to the sector as the “bedrock of our economy” reflects a view shared by KPMG.

The key question is whether the measures are sufficient to influence business decisions. Ireland’s private enterprises approached Budget 2027 with confidence and ambition.

KPMG’s Enterprise Barometer 2025 found that 79% of respondents were confident about growth and 83% aimed to build businesses with enduring value, while only 35% believed the Government adequately recognised enterprise as a driver of economic growth.

The Budget should therefore be assessed not only by its Exchequer cost, but also by whether it encourages founders to invest, retain ownership, scale and recycle capital into future Irish ventures.

Capital and deposits

Improving access to patient capital remains a priority. A significant share of Irish household wealth remains on deposit, with comparatively little invested in growing indigenous businesses. The announced Investment Account should encourage broader participation in capital markets.

However, reforms to the Employment and Investment Incentive Scheme (EIIS) could have further supported investment in Irish businesses and SMEs. In particular, clearer eligibility rules for businesses and investors, greater flexibility for qualifying subsidiaries to raise capital, and more proportionate connected-party provisions would have been welcome.

Tax framework

The tax framework should support long-term ownership and growth. The significant difference between the taxation of dividends and the 10% CGT rate that may apply to a qualifying disposal under Revised Entrepreneur Relief can incentivise founders to sell rather than remain invested.

Budget 2027 could have addressed this imbalance by increasing the relief’s lifetime limit, introducing a capped dividend tax rate for active SMEs and a lower rate for qualifying entrepreneur-shareholders, and more broadly recognising investors who commit genuine risk capital.

CGT and succession

Capital taxation and succession should form part of a coherent enterprise framework. The welcome reduction in the CGT rate to 31% is a step in the right direction. If it had been combined with the restoration of relief for inflationary gains and CGT deferral where proceeds are reinvested in innovative SMEs, it would have created stronger incentives to redeploy capital.

Family-owned businesses also need predictable succession rules. Reforms to Retirement Relief and CAT business relief could support genuine intergenerational continuity while avoiding disproportionate cliff effects or clawbacks where the qualifying business remains within the family.

However, a 2% reduction in the CGT rate alone may not materially influence decisions on where to build a business or whether and when to sell. It nevertheless demonstrates the Government’s commitment to maintaining momentum in this area.

Retaining talent

Talent measures must reflect the practical challenges facing private enterprises. Indigenous businesses compete for scarce skills with employers that often have greater scope to offer higher cash remuneration, and equity can help bridge that gap.

However, Budget 2027 did not address key reforms that could assist domestic businesses, particularly under the Key Employee Engagement Programme (KEEP). Administrative complexity, valuation uncertainty, and restrictive limits continue to constrain the programme.

Effective reform should introduce valuation safe harbours, accommodate common holding-company structures, raise relevant limits and extend Revised Entrepreneur Relief to qualifying KEEP shares.

Extending the Special Assignee Relief Programme to eligible external recruits would also recognise that most Irish SMEs cannot access specialist talent through transfers from overseas group companies.

Tax simplification

Simplification is itself a competitiveness measure. Compliance costs consume a larger share of an SME’s resources compared to a larger organisation. The announced changes to the Enhanced Reporting Requirements and preliminary corporation tax rules should provide greater certainty and increase flexibility, freeing management to focus on productive activity.

Future Budgets should consider simplifying corporation tax and VAT returns, retaining the SME transfer-pricing exemption, and excluding wholly domestic transactions from transfer pricing rules to reduce compliance costs for Irish businesses.

Effective domestic strategy

Ultimately, Budget 2027 should be judged on whether its measures operate as a connected package across the business lifecycle, rather than as a series of standalone adjustments.

A credible domestic enterprise strategy must support business formation, access to finance, recruitment, innovation, sustained growth, and succession. While the measures introduced are welcome, further reform will be needed. We hope the minister’s announced wide-ranging review of the sector results in further changes aligned with the priorities set out above.