Pearse Doherty
Ceist:104. Deputy Pearse Doherty asked the Minister for Finance the reason the cap on intangible assets that could be written off against profits was raised to 100% in budget 2015. [30969/18]
Amharc ar fhreagraWednesday, 11 July 2018
Ceisteanna (104)
Freagraí scríofa
Capital allowances for intangible assets were introduced in Finance Act 2009 to support the development of the knowledge economy and the provision of high quality employment. When the capital allowances were introduced, to ensure that a measure of tax remained in charge annually, a restriction was provided to cap the amount of income that the allowances could be used against in any year at 80%. The restriction did not deny the use of the capital allowances, it merely lengthened the time period over which they could be utilised.
Ireland is not unique in providing capital allowances for intangible assets and the tax treatment of intangible assets is similar to the approach taken in other countries, such as the UK and the US.
In Finance Act 2014, the cap of 80% was increased to 100%, effective for accounting periods commencing on or after 1 January 2015. The rationale for increasing the cap was to bring the tax treatment of intangible assets into line with the tax treatment of similar assets in other jurisdictions and to enhance the competitiveness of the Irish regime for intangible assets to make Ireland an attractive location for companies to develop intellectual property. This was in recognition of the fact that investment and growth in OECD economies is increasingly driven by investment in intangible assets.
Noting a significant increase in the use of the capital allowances in 2015, the Coffey Review recommended that, to ensure some smoothing of corporation tax revenue over time, the 80% cap should be restored, and this recommendation was acted on in Finance Bill 2017. Again the cap does not affect the overall capital allowances available but merely lengthens the time frame over which they can be used.
Question No. 105 answered with Question No. 73.
Question No. 106 answered with Question No. 78.