Thursday, 25 October 2018

Questions (23)

Pearse Doherty


23. Deputy Pearse Doherty asked the Minister for Finance if he will introduce a simplified process by which small and medium-sized enterprises can avail of the research and development tax credit. [44219/18]

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Written answers (Question to Finance)

There are no specific provisions for small and medium enterprises (SMEs) in the research and development (R&D) tax credit, and nor are there any restrictions for SMEs wishing to avail of the scheme. It is available to all firms, within the charge to Irish tax, that undertake qualifying R&D activities in the European Economic Area. However I am aware that Revenue issued guidance in February 2017 with the specific aim to reduce the administrative burden for relatively small claims for SMEs and micro-companies.

The administration of the R&D tax credit is a matter for the Revenue Commissioners and I am aware that Revenue participate in a number of initiatives to ensure that the availability of the R&D tax credit, and the activities in respect of which it is available, is communicated to firms of all sizes. For example, Revenue attend and speak at R&D events organised by IRDG, IDA and EI. Revenue has also established the Research & Development (R&D) discussion group which provides a forum for Revenue and representative organisations to raise and address issues affecting the operation of the R&D tax credit.

I would also note that the refundable nature of the R&D tax credit can be particularly attractive to start-up companies or SMEs which are not making profits as the credit can effectively part-fund the R&D activity and act as a valuable source of cash-flow.

Notwithstanding these points, I am aware of proposals that a separate, simplified R&D tax credit be introduced for small companies. In view of the Exchequer cost of the relief such proposals have to be carefully considered. In line with my Department’s Tax Expenditure Guidelines, a full ex-post cost benefit analysis and evaluation of the R&D tax credit is scheduled to be carried out in 2019, and this will include consideration of proposals for alterations to the credit.