Dáil Éireann Debate, Tuesday - 1 May 2018
79. Deputy Michael McGrath asked the Minister for Finance his views on the uptake of the knowledge development box in view of the fact that the initial estimate in budget 2016 was €31 million in the first year and €50 million in a full year; the way in which this estimate was arrived at; if he is satisfied that the knowledge development box is achieving its objectives; and if he will make a statement on the matter. [18638/18]
Amharc ar fhreagra80. Deputy Michael McGrath asked the Minister for Finance the estimated cost of rolling out the knowledge development box set out in budget 2016; the number of companies that were expected to avail of the scheme at the time; and if he will make a statement on the matter. [18639/18]
Amharc ar fhreagra81. Deputy Michael McGrath asked the Minister for Finance the measures being taken to increase the uptake of the knowledge development box; and if he will make a statement on the matter. [18640/18]
Amharc ar fhreagraI propose to take Questions Nos. 79 to 81, inclusive, together.
The Knowledge Development Box (KDB) was introduced by the Finance Act 2015. It provides for relief from tax on the profits earned from the exploitation of patents, copyrighted software and IP for small companies, provided that IP was developed through R and D carried out in Ireland.
The potential cost of the KDB was arrived at by looking at the taxable profits of the companies who claimed the R and D tax credit in 2014 and who it was considered might be in a position to claim the KDB. For example, certain categories of companies (such as multinational-owned companies) were excluded as it was considered they would not have the required structures to facilitate claims under the KDB.
I am informed by Revenue that, to date, not more than 10 companies have claimed relief under the KDB and that the tax cost of these claims to date is no more than €5 million. However, these figures are as yet preliminary due to the deadlines which apply for submission of claims. Relief under the KDB was introduced for accounting periods ending on or after 1 January 2016. Therefore, the first corporation tax returns in which relief could be claimed were due for filing up to 23 September 2017. However, as the regime is complex and a company must make an irrevocable election into the KDB, the legislation provided that companies had a 24-month period in which to make their claim for relief. Therefore, most companies have until the end of this year to submit their claims for their 2016 accounting periods.
At the outset it was anticipated that companies would make full use of that 24-month period to make a decision on whether or not to elect into the KDB. Therefore, it is expected that the figures relating to the companies who have already claimed the relief are preliminary and should not be used to assess the impact of the relief until they are finalised after December this year.
With regard to the Deputy's question as to measures taken to increase uptake of the KDB, I am advised by Revenue that they have published extensive guidance on the KDB. They have presented at a number of R and D industry events to help ensure a consistency of approach in applying the legislation, and also ensure that uncertainties on the application of the KDB are identified at an early stage and addressed. As taxpayers encounter uncertainty in the application of the rules – particularly those around the tracking and tracing documentation requirements – Revenue will develop updated examples to bring clarity to issues identified.
I also understand that a number of State Agencies are actively engaged in promoting the use of the KDB. The IDA and Enterprise Ireland have presented at a number of R and D industry events. Additionally, since its introduction, the IDA have promoted the KDB to existing and new clients.
