Finian McGrath
Ceist:282 Deputy Finian McGrath asked the Minister for Finance if he will examine and support a proposal on forced lay-offs (details supplied). [1326/11]
Amharc ar fhreagraWednesday, 12 January 2011
Ceisteanna (232)
Freagraí scríofa
As stated in my response to the Deputy's previous question in this matter, the decision to abolish the relief was taken in the light of a recommendation to this effect by the Commission on Taxation. The Commission's views on this relief were quite definitive. It found that it had not had the desired impact on innovation and R&D activity and, that despite various refinements to the scheme over the years, suggested that the relief was not a particularly well-targeted measure providing good value for money. The Commission also expressed the view that the relief had not resulted to any great extent in companies carrying out R&D activity and that it was being used in some cases by companies "as a tax avoidance device to remunerate employees". Abolition of the patent income exemption will yield €50 million to the Exchequer in a full year and this is provided for in the National Recovery Plan.
The Government agrees with the conclusions of the Commission and believes that in the current challenging times scarce resources should be focused instead on the R&D tax credit scheme. The R&D credit scheme provides a more direct and effective incentive for enterprises to innovate and invest in R&D activities and the scheme has been enhanced considerably in recent years to make it one of the most competitive of its kind anywhere.
The Business Expansion Scheme is also available to help small and medium sized companies raise risk capital investments from private investors. As you may be aware, I announced in the recent Budget that this scheme will be replaced by an Employment Investment Incentive once the approval of the European Commission has been received. The new incentive will provide an increase in the limits that companies can raise as well as a simplified certification requirement. Full details will be included in the forthcoming Finance Bill.