R&D tax credit scheme enhanced

MINISTER for Finance Brian Cowen yesterday announced an improvement to the existing research and development (R&D) tax credit levels to promote spending, particularly in the manufacturing sector.

The base year expenditure against which qualifying incremental expenditure on R&D is measured under the tax credit scheme is to remain fixed for a further three years to 2009. The 2003 base year had been fixed for the first three years of the scheme and was due to roll forward to 2004 for the purpose of calculating the 20% tax credit for 2007.

From the start of January, expenditure by companies on sub-contracting R&D work to unconnected parties will qualify under the tax credit scheme up to a limit of 10% of qualifying R&D expenditure in any one year. These changes will cost €26 million next year and €70m in a full year.