I propose to take Questions Nos. 89 to 93, inclusive, together.
I am advised by Revenue that statistical information in respect of the Research & Development (R&D) credit is available at link; https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/index.aspx for all years up to 2017.
Regarding Question 89, the estimated cost of increasing the credit to 30% for SMEs (defined here as companies with less than 250 employees) is in the region of €30 million.
Regarding Questions 90 and 92, information in respect of the additional cost of the credit that would arise if the outsourcing restriction was lifted, or in respect of the uptake by early stage scaling companies, are not available from tax returns data. Therefore, there is no reliable basis to allow an estimate of the cost to be provided.
Regarding Question 91 the changes proposed to the R&D credit would have cash-flow impacts (in terms of timing of payments to the Exchequer) but would not ultimately incur an additional cost assuming there was no widening of the scope of the R&D to which the credit applies. The impact of these proposals cannot be ascertained in the absence of forecasts of likely future expenditure on R&D by such companies.
Regarding Question 93, a pre-approval process for the R&D credit should not incur an additional cost to the exchequer. At present a company claims the R&D tax credit on their self-assessed tax return. Revenue has advised me that in putting together a claim for the R&D tax credit, the company must be satisfied that the claim will pass both the science test (i.e. that the activity is a qualifying activity) and the accounting test (i.e. is the amount of the claim correct).
Where, during risk profiling, Revenue identifies an uncertainty in respect of whether or not the activities are qualifying R&D activities, it will engage the services of an independent technical expert to validate the scientific/technological merits of the activity. Should a pre-approval process be introduced, limitations on the availability of these experts would give rise to delays, potentially acting as a barrier to companies carrying on R&D. In respect of the accounting test, it is not possible to verify that an amount is expended on qualifying R&D activities until the activity is carried on and the costs incurred. As such, in addition to the difficulty of implementing an equitable pre-approval process in relation to the science test, it is not possible to put in place an effective pre-approval process for the accounting test.