Dáil Éireann Debate, Thursday - 5 July 2018
87. Deputy Pearse Doherty asked the Minister for Finance if it is feasible technically to introduce a varied tax credit rate of 30% for SMEs only availing of the research and development tax credit; the potential cost estimates; and if he will make a statement on the matter. [29777/18]
View answerIt is assumed the Deputy is proposing to increase the tax credit rate of 25% for research and development expenditure to 30% for SMEs.
With regards to the potential for a change in to the rate provided to SMEs, potential State Aid implications would need to be considered when making any change which would provide a varied rate to any targeted cohort of taxpayers. However I would note that the existing refundable element of the tax credit is of particular assistance to companies that are not currently making profits, and this can be of relevance to SME companies in a research & development phase.
It is not possible to accurately estimate the potential future cost implications of the Deputy's proposed increase to the R&D Tax Credit provided to SMEs, as this would be dependent on future expenditure and the potential impact on expenditure from this increase in the credit. However, I am advised by Revenue that, based on claims in respect of the research and development tax credit included in 2016 tax returns, the estimated tax cost of increasing the rate to 30% rate for SMEs could be in the region of €30 million in a full year. This cost assumes no behavioural change.
The Deputy may also be interested to note that Revenue has recently published a new dataset in relation to the research and development tax credit, which is available at: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx.
