Budget 2026: Support for indigenous businesses
Much of the economic narrative in 2025 has been dominated by the changing environment in international trade and in particular the introduction of a range of tariff measures by the US government. Headlines have been dominated by sporadic announcements of new measures, despite which uncertainty continues to persist. The challenges faced by the Irish economy in terms of its impact on exporting business, job stability and ultimately exchequer receipts have formed the backdrop to Budget 2026.
Trading environment: Impact on indigenous business
In that context, there may be a temptation to focus on a relatively small number of large corporates operating in some key sectors (principally pharmaceutical & chemicals and semiconductors) whose products comprise the lion’s share of Irish goods exports to the US; however, this would be to ignore the potential impact of the measures on indigenous Irish business.
A number of key domestic businesses in the areas of dairy and wider food production, and the alcoholic beverage sector, for whom the US is a key market, are impacted directly by tariff measures and face significant challenges in the period ahead. These businesses will be watching closely to see what support measures, if any, are introduced in Budget 2026.
In addition, a large number of indigenous businesses who on the face of it are not involved in exporting are at risk of taking an indirect hit, in that they may be reliant on the Irish-based multinationals for much of their turnover, perhaps supplying goods or services to these organisations or, in some cases, their staff; for example, the coffee shop or restaurant that relies on the staff of the local large corporate for much of its footfall.
Recurring challenges and business supports
These challenges are in addition to some familiar existing ones already facing indigenous business, such as the rising cost of doing business and hiring & staff retention. Such businesses will therefore look to Budget 2026 in the hope of some measures, tax or otherwise, to ease the burden imposed by these various challenges, new and recurring.
What then are the types of tax-based measures that SMEs are hoping for in Budget 2026? In considering this question, government will have specific regard to the current challenges but also an eye to the longer-term policy goal of expanding the indigenous exporting sector.
Targeted approach: Three key areas
We would highlight three key areas where meaningful and impactful changes could be introduced.
1. Driving innovation
For SMEs to thrive, and for wider policy goals to be met, it is important that businesses are encouraged and facilitated in the areas of R&D and innovation, developing new products and processes, and improving efficiencies.
The Irish tax code already contains a number of measures in this area, notably the R&D corporation tax credit, the Knowledge Development Box, and capital allowances for scientific research and the development of intangible assets. The R&D tax credit is now more than 20 years old and has gradually been expanded over the years, now providing an additional tax credit of 30% of qualifying expenditure. Nevertheless, further simplification of the process of claiming and, in particular, expediting the payment of the credit would be welcome. Recent soundings from government indicate that significant changes may be introduced to the credit in Budget 2026 and this may be something to watch.
2. Raising finance
Capital is the lifeblood of a business but raising finance can be challenging. The tax code can assist (the government’s long-established flagship EII Scheme is an effort to do so, albeit that the significant changes introduced in recent years have been something of a mixed bag) but unfortunately on occasion it can also act as a hindrance, as exemplified by the overly complex means for claiming tax relief on interest payments. This latter issue has been the subject of a recent government review and consultation and it is hoped that some simplification measures may be introduced.
3. Attracting and retaining talent
A key challenge for businesses, especially in recent years with the tight labour market, has been attracting and retaining staff. While reliefs such as SARP are of use in attracting mobile workers from overseas, share-based remuneration is also a key feature of any country’s offering and in this area Ireland is quite weak.
The share-based schemes that do exist are not particularly attractive from a tax perspective, generally imposing an income tax charge on the employee. The flagship options-based scheme introduced in 2018, KEEP, which provides for potential CGT treatment on the gains realised, has not lived up to its potential. The introduction of a small number of additional measures could however be transformative and improve uptake; for example, a safe harbour mechanism for valuations could reduce the risk element as well as the administrative burden for employers, while the inclusion of the option period for the purposes of determining the ownership period of the shares would make it easier for employees to dispose of their shares in a manner that attracts CGT treatment and thereby improve liquidity in the shares, which is almost always a challenge in unquoted companies.
Walking the walk
There has been much rhetoric from government about the importance of the SME and indigenous sector and of its role in sustaining jobs. We have also heard much about the need to reduce reliance on the multinational sector and develop an indigenous, export-led sector. Budget 2026 will be a key test to see if actions match the rhetoric.
Our Budget 2026 webinar, featuring leading economic analyst and commentator Jim Power along with a panel of Crowe Ireland experts moderated by tax partner Claire Davey, is now available to view on demand. Click here to to find out more about what Budget 2026 means for business owners across all sectors.
