Ireland needs a strategic approach if it wants to foster local companies and grow Irish-owned multinationals, according to the latest report by tax consultancy company PwC.
Among a number of measures, it recommends establishing a sovereign scale-up fund and a phased reduction of capital gains tax from the current rate of 33%.
Speaking on RTÉ's Morning Ireland, PwC Tax Partner Colm O'Callaghan said that, following the success of foreign direct investment, the State must "rebalance the plane flying on one engine" and "focus on the domestic economy and help Irish businesses scale" to ensure "long-term resilience".
In 2024, three large multinational companies paid around €13 billion or 46% of the corporation tax here, according to the Irish Fiscal Advisory Council.
One of the challenges highlighted by PwC is Irish firms selling early due to the lack of late-stage capital domestically.
It has proposed a creation of a sovereign scale-up capital fund, which could be a mix between state and private funding.
"We need to look creatively - in the likes of Singapore, they have state-backed long-term investments into Singaporean entities that help businesses grow with patient capital," Mr O'Callaghan explained.
The proposed savings account, which is being currently being developed by the Government, could be among the sources for the fund.
The Department of Enterprise estimated that around €1.1 billion of funding is lacking for Irish businesses that want to grow here in the next three to five years.
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The tax experts also argued that the current capital gains tax rate needs revision.
PwC advocates for a phased reduction from the current 33% to 20% over a number of years.
Higher than average CGT here "actively discourages entrepreneurship, reinvestment and long-term ownership", according to the PwC report.
In a statement to RTÉ News, the Minister for Finance Simon Harris said it "is clear that Ireland needs more companies that can start here, scale here and remain headquartered here".
He said the Government is "examining a range of measures to support ... indigenous business growth, as part of the upcoming budget process".
Among other challenges faced by Irish businesses is talent retention and cultural obstacles, including risk aversion or taking on debt, which are "associated with growing".
PwC called this "a conservative growth mindset among Irish SMEs can hinder scaling efforts", with a traditionally cautious approach to borrowing.
