R&D tax credit scheme enhanced
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.
“We must act now to promote as many jobs as possible in the productive sector in the State. Investment in R&D is a key factor in retaining our manufacturing base. The special R&D tax credit seeks to encourage this.
“These improvements will complement Government spending on science technology and innovation which will increase from €800m in 2006 to €900m in 2007,” Mr Cowen said.
“The increase from three to six years in the period of tax benefit for incremental R&D will not only enhance the value of the incentive but provide critical longer- term certainty for indigenous and foreign direct investment companies making key strategic decisions to invest in R&D or locate related activities to Ireland,” added Minister for Enterprise, Trade and Employment Micheál Martin.
Mr Martin said the measures sent “a clear signal to business that this Government is supporting companies’ efforts to develop new products and win new markets.”
