Simon Harris (Wicklow, Fine Gael) | Oireachtas source

We are probably both proud of the fact that we have a very difference perspective on this section of the Finance Bill, in terms of our views on the knowledge development box. It is not fair to say that the Minister was dragged, kicking and screaming anywhere in the context of his approach to ensuring that this country promotes best practice when it comes to taxation and plays a prominent, leadership role within the OECD's BEPS discussions. The Deputy does not have to take my word for that because there is evidence in last year's Finance Bill to back it up. The Minister abolished the so-called double-Irish in that legislation which gave this country a first-mover advantage and sent out a very powerful message to investors about certainty and to the OECD that this country wants to play a constructive role and encourages others to do likewise. Now we have arrived at the point where we have the OECD BEPS process in place. I also do not accept the Deputy's suggestion that there is an over-reliance on FDI. If one looks at the job creation figures, which I do not have to hand unfortunately, one will see that the majority of new jobs in the Irish economy have been created by indigenous Irish companies.

We must be very clear that the knowledge development box is not just an incentive for FDI companies. It is also an incentive for indigenous Irish companies, startups and young companies in this country to develop, innovate and research here. If we do not put such measures in place here we will make Ireland a less attractive location compared to competitor jurisdictions in terms of encouraging companies to innovate, research, develop and register patents. The Minister for Finance mentioned during the Second Stage debate on the Finance Bill that is quite likely because of the operation of the OECD modified nexus that the knowledge development box will be of most benefit to single companies which carry out their research and development activities in Ireland. We would be very happy to see smaller Irish indigenous business availing of this relief and we expect, certainly in the initial years, that to be the case.

On the issue of corporation tax, the Deputy said there is much speculation as to why we have seen a spike in corporation tax receipts.

Rather than speculating I am following the advice of the Revenue Commissioners on this. Revenue has advised the Minister and the Department of Finance that the increase is attributable to, among other things, improved trading conditions and the positive currency fluctuations. The Deputy's point that we do need to continue to monitor it is a fair one.

On the cost, my understanding is that the cost for 2016 is estimated to be €31 million. The Deputy is correct that it will be €50 million in a full year. That is based on a reasonable assumption of a 50% uptake. The legislation provides that the knowledge development box, KDB, will arise in respect of accounting periods commencing on or after 1 January 2016. This cost for 2016 can be further refined to €31 million on the basis of the payment dates for preliminary tax which fall due in 2016.