Dáil Éireann Debate, Thursday - 10 November 2016
100. Deputy Pearse Doherty asked the Minister for Finance the number of companies that have availed of the knowledge development box since its introduction; if he will provide a breakdown of the companies by size, that is, micro, small and medium enterprises (SME) or large companies; his plans to assess the impact of the knowledge development box; and if he will make a statement on the matter. [34121/16]
Amharc ar fhreagraThe Knowledge Development Box (KDB) was introduced in Finance Act 2015 and applies from 1 January 2016. At this time it is not possible to provide a breakdown of the uptake of the measure as the data is not yet available. The Corporation Tax returns that relate to the activity in 2016 will not be filed until November 2017.
It is expected that because of the operation of the formula set out by the OECD "modified nexus", the KDB will be of most benefit to single companies who carry out their R&D activities solely in Ireland, or in the EU/EEA via a branch. Therefore, even though the KDB is a general measure open to all corporate taxpayers, it is anticipated in the early years that it will be of most use to small innovative Irish businesses.
In line with the Government commitment in the Medium Term Economic Statement and the Department of Finance Tax Expenditure Guidelines, the KDB legislation includes a review clause to ensure that an evaluation is carried out to assess the KDB and ensure that it provides value for money for the Irish taxpayer.
The approach to such an evaluation is noted in the 2015 Report on Tax Expenditures which is published on the Department's website at the following link (see page 73):http://budget.gov.ie/Budgets/2016/Documents/Tax_Expenditures_Report_pub.pdf.
To ensure that the evaluation of the KDB is carried out in advance of Finance Bill 2020, it is anticipated that this review would be complete by Q2 2020. By this time the CT returns will have been filed by KDB claimants for the period 2016 to 2018, and the relevant data from these returns may be examined to provide a breakdown of the number and size of companies availing of the KDB.
