Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I move amendment No. 43:

In page 43, between lines 3 and 4, to insert the following:“ ‘Member State’ has the same meaning as ‘relevant Member State’ has in section 766;”.

Most of these amendments are technical in nature with the purpose of correcting minor drafting errors and ensuring the legislation that implements the knowledge development box, KDB, operates as intended.

The main substantive amendment is amendment No. 49, which extends the amount of time that a company has to make a claim for the KDB relief. As initiated, the legislation provides that a company has to make a claim for relief within 12 months of the end of the accounting period. However, I am now extending the period to 24 months to recognise that the KDB is a new tax incentive, there are significant documentation requirements that must be met before any claim is made, and that it will take time for taxpayers to become familiar with its operation. This will provide some additional flexibility and allow taxpayers to respond to the requirements of the KDB, in particular those that relate to the documentation that is required support a claim.

Amendment No. 43 clarifies the definition of member state used for the purpose of the KDB refers to the EU and EEA regions, not just the EU as per the original legislation.Amendment No. 44 is a technical amendment correcting the reference to the appropriate section of the Patents Act 1992. Amendment No. 45 clarifies the criteria that should be applied by an agent for the purposes of certifying patents that are not subject to an examination for novelty and inventive step. This is aligned to the standard criteria for examined patents.

Amendment No. 46 makes it clear that all qualifying research and development expenditure that leads to the development of a qualifying asset may be included in the KDB computation. This will ensure that even unsuccessful research and development may be included, so long as it sought to resolve the uncertainty that the ultimately developed the qualifying asset resolves. Amendment No. 47 clarifies that an amount of research and development expenditure does not have to be excluded for the purposes of the KDB computation simply because such expenditure is capitalised only for accounting purposes. At present, the legislation already provides for this to be included in respect of intangible assets, for example a business process or know-how. This change will ensure it may also be included for tangible assets, for example aspects of a piece of equipment protected by a patent.

Amendments Nos. 48 and 51 are technical amendments which are necessary to remove a circular calculation, thereby ensuring the KDB computation works. Amendment No. 49 provides a claim must be made within 24 months, rather than within 12 months. Amendments Nos. 50 and 52 are technical and are necessary to clarify that the obligations to keep records and documentation as set out in section 769I and 769L apply only to a company that claims the KDB relief. Amendments Nos. 53 to 58, inclusive, are technical amendments to delete a superfluous subsection in section 769O and amend all consequential references within that section.

Amendments Nos 59 and 60 are necessary to clarify that the criteria which apply to the additional category of assets for small companies is within both the OECD rules, but also the EU state aid rules. This follows the definition of a micro, small or medium-sized enterprises as set out in Commission's Recommendation 2003/361/EC of 6 May 2003. Specifically, this change will clarify that to qualify for the additional category of assets, the Irish taxpayer must have less than €7.5 million of income from all intellectual property per annum; employ less than 250 people; have a balance sheet of less than €43 million; and have a global annual turnover of less than €50 million. If the Irish entity is a member of a group of companies, then this turnover requirement applies to not just the stand-alone Irish company but to the whole global group.

I commend these amendments.