Ireland is a ‘top R&D location’

IRELAND is one of the most competitive locations for research and development (R&D) investment in the world, according to a report.

Accountancy firm Mazars evaluated the cost of global R&D initiatives after tax and other cost incentives in 20 countries.

Of the countries examined, eight with attractive R&D tax regimes were analysed in depth to ascertain the most effective tax rate for companies making R&D investment.

Of the eight countries examined — Australia, Canada, France, Ireland, Israel, Netherlands, Britain and the USA — Ireland had an effective tax rate of 1%, making it the second most competitive country.

Israel had the most competitive effective rate at -6%.

Mazars tax partner Noel Cunningham said changes introduced on R&D tax credits in recent budgets have greatly enhanced the attractiveness of investing in R&D by both Irish and multinational companies.

“A tax computation was completed for each country to determine the after tax cost of a given level of R&D expenditure so as to arrive at an effective tax rate.

“Israel and Ireland had the best corporation tax rates at 11.5% and 12.5% respectively. However, Israel’s regime provides for grants of 50% of the R&D investment, whereas Ireland provides a tax credit of 25%. This is where Israel leads the rest of the world in terms of supporting R&D investment.”

Already this year 14 companies have made R&D announcements in Ireland, including IBM, which has invested €66 million in its first smarter cities technology centre, which will create 200 jobs; and Analogue Devices in Limerick, which has invested €23m in R&D.

“Based on our analysis, Ireland should attract continued R&D investments to Ireland,” said Mr Cunningham.

He also said there are a number of critical non-tax factors which multinationals consider when evaluating a location for R&D investment, such as the availability of qualified research institutions, the education level of the available workforce, and the availability of facilities.