The research and development (R&D) tax credit allows a company to claim a 25% tax credit in respect of expenditure incurred on qualifying R&D activities. In making a claim for the R&D tax credit, companies must satisfy two tests: the activity must be a qualifying activity (a science test) and the amount of the claim must be based on R&D expenditure incurred (an accounting test). A claim for the R&D tax credit is made on a self-assessment basis. A corporation tax return captures certain information in relation to the R&D credit, in particular information which is required for the purposes of calculating a company’s tax liability.
With regard to research on R&D activities, the biennial Business Expenditure on Research and Development (BERD) survey of enterprises measures the R&D expenditure, human resources and other R&D related topics for enterprises in Ireland. The survey, undertaken by the Central Statistics Office, is a census of all enterprises that are believed to be engaged in R&D activities in all business sectors of the economy. The latest information in respect the BERD survey is available on the Central Statistics Office website at www.cso.ie/en/methods/multisectoral/businessexpenditureonresearchanddevelopment/.
Revenue also publish statistics on the R&D credit based on information from corporation tax returns. Statistics in relation to the years 2012 to 2019 are available on the Revenue website at: www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx. The published statistics provide information on the number and cost of R&D credit claims as well as a breakdown of the claims by business sector.
A change to the corporation tax return which would oblige companies to disclose what kind of R&D activity they are carrying out would create additional administration for firms, particularly smaller companies, in addition to the existing paperwork required for claiming the credit. Having regard to the information already available, as set out above, I do not consider this is required at this time.
However, as with all tax expenditures, officials in my Department frequently monitor the credit and regular engagement with stakeholders is facilitated. I note the Deputy’s point and this will be considered in tandem with other policy considerations in due course.
