Dáil Éireann Debate, Tuesday - 25 July 2023
317. Deputy Róisín Shortall asked the Minister for Finance the rate at which the refundable portion of the research and development tax credit is taxed; the amount of taxation generated by the tax since 2018, in tabular form; and if he will make a statement on the matter. [36230/23]
Amharc ar fhreagraThe 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. 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. 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).
An R&D tax credit to which a company is entitled, including any refundable portion where relevant, is not taxable income and is not therefore subject to any rate of tax. The Deputy will be aware that Ireland is currently preparing for the implementation of the Pillar Two agreement on a minimum effective rate of corporation tax. This will bring certain tax credits, including the R&D tax credit, within scope of the minimum tax calculations, when introduced.
Information on the cost of the R&D tax credit is published annually by Revenue. The latest publication contains information in relation to the 2021 tax year and is available at: www.revenue.ie/en/corporate/documents/research/ct-analysis-2023.pdf.
