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Departmental Schemes

Dáil Éireann Debate, Thursday - 28 April 2022

Thursday, 28 April 2022

Questions (31)

David Stanton

Question:

31. Deputy David Stanton asked the Minister for Finance his Department’s plans, if any, to encourage greater take up of the research and development, R and D, tax credit by small domestic companies; and if he will make a statement on the matter. [21412/22]

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Oral answers (7 contributions)

What are the Department of Finance's plans, if any, to encourage greater take up of the R&D tax credit for small domestic companies?

The Deputy might give me a moment. We have jumped quite a few questions because people are not here this morning and I want to get my folder in order. I thank him for raising the issue. The research and development tax credit allows companies to claim a 25% tax credit in respect of expenditure incurred on qualifying R&D activities.

To conclude our conversation of a few moments ago on the credit unions, if there is anything the Deputy wants to contact me directly on I would be very happy for him to do so. We can take up any individual issue relating to the credit union movement. On levies, since we came to office, this Government has reduced the levies by 53%. It is a phenomenal reduction. I understand people would prefer to have little or no levies but it is important the credit union movement and credit unions themselves have adequate resources to meet all their requirements. We saw last week's AGM was mostly consumed with the issue of funding potential deficits in the pension scheme and I think the credit unions are dealing with that.

Returning to the current question, the programme for Government, Our Shared Future, recognises the importance of research, development and innovation as these are recurring themes across a number of the mission aims. Specifically in relation to small business taxes, there is a commitment to continue to encourage greater take-up of the R&D tax credit by small domestic companies by building on recent changes and examining issues with respect to preapproval procedures and reduced record keeping requirements.

A review of the R&D tax credit is taking place during 2022, alongside an evaluation of the knowledge development box. As part of this review, my officials published a public consultation relating to the operation of both reliefs. The consultation documents include questions on the interaction by small and medium enterprises with the R&D tax credit. The purpose of this public consultation is to consider the current challenges facing firms that are active in the R&D and intellectual property, IP, space as well as the implications of recent domestic and international tax reforms for these two reliefs. It is a fantastic scheme for the businesses that do it. Depending on their profits they can get a cash payment back to the company and if their taxation situation does not allow them to get it by way of tax they can get it back directly as a credit.

I thank the Minister of State for that response and his reply to my earlier question. Is he able to give me some idea about the take up? What kind of rebates are we talking about? What kind of refunding and credits are we talking about? What percentage of companies are involved in this? What plans has the Minister of State to encourage more to get involved and to advertise and promote it?

The Deputy will appreciate I do not have the full schedule of costs. I am making a note to get that information from the Department through contact with the Revenue Commissioners. The latter will have the information on the number of businesses taking up that relief readily to hand. Through my office, I will ask for that information to be obtained and forwarded to the Deputy.

The second part of that question was what plans has the Minister of State or the Department to encourage companies further to take up this credit and also to promote it. Would the Minister of State agree with me that many companies do not know about this? There is a lack of awareness. How is the scheme to be expedited and promoted?

The promotion of this scheme genuinely falls to the Department of Enterprise, Trade and Employment. It is about business. We will write the cheque at the end of it but it belongs to that Department. From my own direct knowledge of the scheme I agree the small businesses do not know about it. The local enterprise offices, LEOs, know about it and Enterprise Ireland, EI, knows about it for its clients as well. In my own work as a Deputy, I realise there is very little happening with it in Ireland. Through the institutes of technology, as they were, or the technological universities as they are now, work was done with schemes through the LEOs or EI to spread the information and the number of applicants in the region, as it takes some work. There is, therefore, a linkage that can be done through the LEOs and EI. In my region some of the institutes of technology have been very strong. It meant counties that were not linked directly to one of those were possibly losing out. There is linkage to be done, though it will be primarily by the Department of Enterprise, Trade and Employment.

I am going to go back to No. 12.

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