For Written Answer on : 25/05/2022
Question Number(s): 29 Question Reference(s): 26785/22
Asked by: David Stanton T.D.
To ask the Minister for Finance if he has considered increasing the research and development tax credit rate from 25% to 35%, up to a reasonable threshold; the estimated cost of doing same up to a threshold of €500,000; and if he will make a statement on the matter.
I am informed by Revenue that, on the basis of R&D relief claimed in respect of the year 2020, the most recent year for which tax returns data are available, the cost of increasing the rate of R&D credit from 25% to 35%, up to a threshold of the first €500,000 of allowable expenditure, would be in the region of €40 million. This estimate does not include the impact of any behavioural change resulting from the change to the tax credit.
A review of the R&D tax credit is taking place this year, alongside a review of the Knowledge Development Box (KDB). As part of the review, my officials published a public consultation relating to the operation of both reliefs.
The purpose of this public consultation is to consider the current challenges facing firms who are active in the R&D and IP space, as well as the implications of recent domestic and international tax reforms for these two reliefs. The consultation document also includes questions on the interaction by small and medium enterprises (SMEs) with the R&D tax credit. All input will be considered in the context of this year’s Budget and Finance Bill. This consultation will run until 30 May 2022 and it is available on www.gov.ie.
It is intended that the review will be published on or before Budget Day, this October. The review and consultation will inform policy in respect of the R&D tax credit, taking account of feedback provided by stakeholders. As the Deputy will appreciate, I cannot comment on tax policy considerations ahead of the annual Budget in October.
The Deputy may also be interested in Revenue’s published information in respect of the research and development tax credit which is available at: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx Data on the cost and claimants of the credit in 2020 recently became available.