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Dáil Éireann Debate, Tuesday - 24 April 2012

Tuesday, 24 April 2012

Ceisteanna (117, 118, 119, 120, 121)

Willie O'Dea

Ceist:

209 Deputy Willie O’Dea asked the Minister for Finance if the first €100,000 of research and development expenditure of all companies has been allowed on a volume basis for the purpose of the research and development tax credit; if not, when it will be completed; and if he will make a statement on the matter. [20030/12]

Amharc ar fhreagra

Willie O'Dea

Ceist:

210 Deputy Willie O’Dea asked the Minister for Finance if the outsourcing arrangements for research and development purposes have been improved to allow the greater of the existing percentage arrangement or €100,000; if not, when it will be completed; and if he will make a statement on the matter. [20031/12]

Amharc ar fhreagra

Willie O'Dea

Ceist:

211 Deputy Willie O’Dea asked the Minister for Finance if companies have been given the option to use some portion of the research and development credit to reward key employees who have been involved in the development of research and development; if not, when it will be completed; and if he will make a statement on the matter. [20032/12]

Amharc ar fhreagra

Freagraí scríofa

I propose to take Questions Nos. 209 to 211, inclusive, together.

I would refer the Deputy to the Finance Act 2012. Sections 8 and 27 refer specifically to the measures relating to the R&D tax credit.

Finance Bill 2012 provided for a number of changes to the R&D tax credit scheme as follows:

Volume basis

The first €100,000 of qualifying R&D expenditure will benefit from the 25% R&D tax credit on a volume basis. The tax credit will continue to apply to incremental R&D expenditure in excess of €100,000 as compared with such expenditure in the base year 2003. This will provide a targeted benefit to SMEs.

Outsourcing limits

Before Finance Bill 2012, sub-contracted R&D costs were eligible where they did not exceed 10% of total costs or 5% in the case of sub-contracting to third level institutions. This limit had the effect of disproportionately affecting smaller companies who may have greater need to outsource R&D work than larger multinationals with greater internal resources. The outsourcing limits for sub-contracted R&D costs were increased in Finance Bill 2012 to the greater of 5 or 10% as appropriate or €100k. This will provide a targeted benefit to SMEs.

Use of the credit to reward R&D employees

Companies in receipt of the R&D credit now have the option to use a portion of the credit to reward key employees who have been involved in the development of R&D. It is envisaged that there would be no additional cost to the Exchequer as the bonus comes from the R&D credit already received by the company and the employee still pays the full tax liability on their other income. This change will be monitored closely and if abused will be removed.

Willie O'Dea

Ceist:

212 Deputy Willie O’Dea asked the Minister for Finance if he has extended the corporation tax holiday for those companies that commence a new trade in the years 2012, 2013 and 2014; if not, when this will be completed; and if he will make a statement on the matter. [20048/12]

Amharc ar fhreagra

I would refer the Deputy to Finance Act 2012. Section 45 refers specifically to the scheme which provides relief from corporation tax on the trading income and certain gains of new start-up companies in the first three years of trading. Finance Bill 2012 extended this scheme for the next three years to include start-up companies which commence a new trade in 2012, 2013 or 2014.

Willie O'Dea

Ceist:

213 Deputy Willie O’Dea asked the Minister for Finance if the foreign earnings deduction has been introduced; if the extension of the FED has been completed; if not, when this will be completed; and if he will make a statement on the matter. [20062/12]

Amharc ar fhreagra

Section 12 of Finance Act 2012 provides for the Foreign Earnings Deduction (FED). The Act was signed into law by the President on 31 March 2012. An initial examination of the potential for extending this relief was undertaken as part of the preparations for the Finance Bill. However, I decided not to introduce such an extension pending an analysis of how the scheme beds down in practice.

I have committed to undertake a review of the scheme in 2014. Depending on the outcome of that review, I will decide whether to retain the deduction or to extend it further.

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