I propose to take Questions Nos. 224, 275, 339 to 343, inclusive, and 346 together.
I am advised by Revenue that information in respect of the annual cost of the Research and Development (R&D) credit is available at https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx for all years up to 2016.
The document includes information in respect of refundable tax credits but estimates of refunds for future years are not available. Information in respect of outstanding liability is also not available but it may be useful for the Deputy to be aware that the document includes the amounts converted to first, second and third payable credit for all years up to 2016.
Year
|
Total Exchequer Cost(€m)
|
Number of Companies
|
2009
|
216
|
900
|
2010
|
224
|
1,172
|
2011
|
261
|
1,409
|
2012
|
282
|
1,543
|
2013
|
421
|
1,576
|
2014
|
553
|
1,570
|
2015
|
708
|
1,535
|
2016
|
670
|
1,506
|
It is not possible to accurately show the yield if the R&D tax credit was no longer payable as information in respect of current expenditure is not available. On the basis of claims from 2016 tax returns, it is tentatively estimated that the full year gain from abolishing the refundable credits aspect of the research and development tax credit could be in the region of €240m. However, the information in respect of payable credits in the document may be of interest to the Deputy.
Due to Revenue’s obligation to observe confidentiality for taxpayer information it is not possible to show the highest refund. The average refund associated with the refundable credit aspect of the relief for the years 2010 to 2016, the latest years available, is as shown in the following table.
Year
|
Average Refund
€
|
2010
|
91,100
|
2011
|
115,450
|
2012
|
127,900
|
2013
|
215,650
|
2014
|
305,400
|
2015
|
349,450
|
2016
|
230,480
|
It is not possible to show the full year cost of allowing up-front refunds under the Research and Development tax credit for young SME companies four years old or younger as information in respect of future expenditure by young SME companies is not available.
Similarly it is not possible to show the cost of increasing the portion of expenses allowed for deduction under the Research and Development tax credit from 25% to 30% for SME companies as information in respect of future expenditure by SMEs is not available. 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% for SMEs could be in the region of €30 million in a full year. This cost assumes no behavioural change.
It may be of interest to the Deputy to note that the published document on the Revenue website shows the tax costs for all years by number of employees. Employee numbers can be used as a measure as to whether or not a business is an SME, as a business with less than 250 employees is generally considered to be an SME.