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Tax Credits

Dáil Éireann Debate, Tuesday - 15 June 2021

Tuesday, 15 June 2021

Ceisteanna (344, 345, 346)

Rose Conway-Walsh

Ceist:

344. Deputy Rose Conway-Walsh asked the Minister for Finance the annual cost to the Exchequer of the research and development tax credit; and if he will make a statement on the matter. [30984/21]

Amharc ar fhreagra

Rose Conway-Walsh

Ceist:

345. Deputy Rose Conway-Walsh asked the Minister for Finance the percentage of the qualifying research and development activity that is eligible to count towards the research and development tax credit that is carried out in the State; the percentage that is carried out elsewhere in the European Economic Area; and if he will make a statement on the matter. [30985/21]

Amharc ar fhreagra

Rose Conway-Walsh

Ceist:

346. Deputy Rose Conway-Walsh asked the Minister for Finance if regional and development activities carried out in Northern Ireland is eligible to count towards the research and development tax credit; and if he will make a statement on the matter. [30986/21]

Amharc ar fhreagra

Freagraí scríofa

I propose to take Questions Nos. 344, 345 and 346 together.

The research and development (R&D) tax credit allows a company to claim a 25% tax credit in respect of expenditure incurred on qualifying R&D activities. In making a claim for the R&D tax credit, companies must satisfy two tests: the activity must be a qualifying activity (a science test); and the amount of the claim must be based on R&D expenditure incurred (an accounting test).

To qualify for the R&D tax credit, a company must be within the charge to corporation tax in the State and must undertake qualifying R&D activities within the European Economic Area (EEA) or the UK and, in the case of an Irish tax resident company, the expenditure must not qualify for a deduction for the purposes of tax in another territory.

As tax returns do not include information in respect of the location of the research and development activity, the information requested by the Deputy in this regard cannot be provided.

The definition of qualifying R&D activities requires that a claimant company engage in a systematic, investigative or experimental activity which seeks to achieve a scientific or technological advancement in a field of science of technology and involves the resolution of scientific or technological uncertainty.

Should an Irish company incur qualifying R&D expenditure on a regional or development activity in Northern Ireland, it may qualify for the R&D tax credit providing the expenditure does not qualify for a deduction for the purposes of tax in another territory. It is also important to note that, where expenditure is met directly or indirectly by grant assistance from any state or other body, the expenditure will not be considered as having been incurred by the relevant company and therefore would not qualify for the R&D credit.

In respect of the cost, I am advised by Revenue that the latest information in respect of the tax cost of the research and development tax credit is available at www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx .

The year 2019 is the most recent year for which comprehensive data on the credit are available. Information in respect of 2020 will be published in 2022 when the corporation tax returns for that year, due for filing up to the end of September 2021, have been analysed.

Question No. 345 answered with Question No. 344.
Question No. 346 answered with Question No. 344.
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