The Irish Software Association has called on the Government to introduce a new tax-based funding scheme to increase seed capital available to high potential technology start-ups.
In its pre-Budget submission, the association expressed concern that the Republic was falling behind other OECD countries in terms of entrepreneurial activity and start-ups. It said new funding schemes could help overcome this.
The association wants tax incentives for investors to partake in early stage funds, particularly in the high potential/high risk technology start-up sector.
Rather than terminating the business expansion scheme (BES) next month as planned, it should be expanded, the association said, while recommending that the total funding a firm can raise under the scheme should be increased from £250,000 (€317,430) to £750,000.
Chairman of the association Mr Billy Huggard said this type of funding was not being provided by venture capital companies. He said the percentage of start-up activity was at only 1 per cent - in comparison to the US at 10 per cent, Canada at 6 per cent and the UK at 3 per cent.
"It is a major concern that of all the OECD countries, Ireland is the second last in terms of start-up activity," said Mr Huggard. By developing and expanding existing frameworks to source seed capital, the Government would provide an expanding entrepreneurship infrastructure, he said.
The association called on the Minister for Finance to reinstate the employers' PRSI ceiling to help cut the cash-burn rate of the information and communications technology (ICT) sector.
"The removal of the PRSI ceiling is effectively a tax on high-value employment and was a surprising development given that the basis of our recent economic growth has largely been in technology and high value employment, which pays higher salary levels and was therefore most impacted by the removal of the ceiling. Now, Ireland's recent 'economic miracle' has been shown to be vulnerable, and Irish industry needs to be given every advantage in being as competitive as possible," the association said.
