R&D tax credit move ‘will help to drive innovation’

IMPROVEMENTS to &research and development (R&D) tax credits have been welcomed as a means of growing both the Small and Medium Enterprises (SME) and multinational sectors.

Yesterday’s budget proposals allow for the first €100,000 worth of R&D expenditure — of all companies — to be counted on a volume basis, for the purpose of the R&D Tax Credit.

There will also be improvements made to the outsourcing arrangements for R&D purposes and companies will have the option to use some of the R&D credit to reward key employees who have been involved in development.

“These improvements will encourage both SME’s and multinationals to engage in additional R&D activity, thereby creating new high-value jobs in the field of R&D,” according to Minister for Research and Innovation, Sean Sherlock.

“The changes to the out-sourcing arrangements, which will allow businesses to outsource R&D activities to universities or organisations, will be of particular benefit to SMEs that generally have less in-house capabilities.

“Encouraging businesses to undertake R&D will enable such businesses to develop new products and services which can be exported to overseas markets; creating new jobs in the manufacturing and services sectors,” he added.

Irish Tax Institute president, Bernard Doherty added: “Improvements to the R&D scheme also indicate that the minister’s thinking is firmly focused on encouraging Irish SMEs to undertake the kind of research that will drive new innovative products and convert them into real global sales opportunities.”

Meanwhile, Mr Noonan also announced that a range of measures, aimed at supporting Ireland’s international financial services sector — including the funds industry — will be included in the Finance Bill.

“The international financial services industry in Ireland has been one of the great export success stories of the last 20 years.

“The sector employs more than 30,000 people and contributes over €1 billion in tax to the exchequer.

“However, financial services are highly mobile and we must compete within a global market to ensure that the sector in Ireland continues to grow,” he said.

The measures will cover various areas such as international funds, corporate treasury, international insurance and aircraft leasing.

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