asked the Minister for Finance if he considers that the provision in recent Finance Acts in connection with venture capital have been effective; and if he will make a statement on the matter.
Written Answers. - Investment Schemes.
20.
I take it that the Deputy's question relates to the business expansion scheme operated under Chapter III of the Finance Act, 1984 (as amended), and the scheme of relief for investment in research and development provided for in Chapter III of the Finance Act, 1986.
I am indeed satisfied that these schemes, in conjunction with the other tax incentives introduced or extended in the Finance Act, 1986 for the promotion of wider share ownership and employee participation, are effective.
Although the business expansion scheme was provided for in the Finance Act, 1984, investments under the scheme were not eligible for relief prior to 1 January 1985. Despite this restriction, investments of some £1.5 million qualified for relief in the income tax year 1984-85. Further investments of £3.7 million were given relief during the income tax year 1985-86, bringing total investments during the first 15 months of operation of the scheme to £5.2 million. These investments were made in 39 companies.
Since 6 April 1986, a further 45 companies have obtained approval for investments of £4.1 million. Inquiries from another 106 companies are at various stages of processing.
The scheme of relief for investment in research and development does not come into effect until 1 January 1987. However, I understand that the Revenue Commissioners have already had a number of inquiries from interested parties. A strong research and development capability is essential if we are to develop a sound manufacturing base to provide jobs for the future. The level of research and development activity in this country is disappointingly low by international standards and I am confident that the incentive scheme will be an effective means of encouraging investment in qualifying projects.