Dáil Éireann Debate, Thursday - 16 September 2021
198. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Question No. 226 of 9 September 2021, the way the cash flow impact was estimated; and if it was calculated on the basis of the excess amount paid fully as a cash payment instalment not earlier than the relevant tax pay and file date for the company’s accounting period in which the qualifying expenditure was made. [44391/21]
View answerThe Deputy's previous question asked for an estimated cost in 2022 of amending the research and development tax credit regime by allowing small and micro companies to receive the credit in one instalment rather than three instalments over a 33-month period payable not earlier than the relevant tax pay and file date for the company’s accounting period in which the qualifying expenditure was made.
I am advised by Revenue that the estimated cash flow impact of €25 million provided in my reply to Parliamentary Question No. 226 of 9 September 2021 was based on 2019 Corporation Tax returns data, for small and micro companies only (assumed to be companies with fewer than 50 employees).
The 1st instalment payable credit claims for these companies in 2019 was approximately €12.5 million. It was assumed the excess amount remaining associated with these claims was €25 million (for the 2nd and 3rd instalments) and that these credits could be claimed up front under the Deputy’s proposal.
This cash flow cost previously provided was not reduced by amounts returned on the 2019 tax returns for 2nd and 3rd instalment associated with earlier expenditure. It was assumed that in the first year of the proposal, the companies would be allowed to claim 100% of the excess amount of the claim plus their existing 2nd and 3rd instalment amounts for earlier expenditure years. The cost is therefore presented as a cash flow cost and not a full year cost.
I am advised by Revenue that these estimates are based on the activity and expenditure levels in 2019. The actual cash flow cost would depend on future R&D expenditure amounts, which are not known at present.
