Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I agree with Deputy Michael McGrath on this issue. I also agree that the value and benefit of the knowledge development box, KDB, to the economy should be measured in new research and development, additional jobs and investment.

To clarify my earlier comments on the OECD process and the European Union, while the Irish box complies with the OECD BEPS process owing to the modified nexus, that modified nexus has now been adopted in the EU code of conduct. The European Union has given the OECD model the seal of approval, for want of a better phrase, in that regard.

The Deputy asked where this positioned Ireland. That is a key question. As the Deputy knows from engaging with multinational companies in his constituency and nationally, tax is only one element. Companies locate here for a variety of reasons, including our talented workforce, the low turnover and high retention rates of staff, the ease of doing business, infrastructure, connectivity, access to the European Union and being the only English speaking nation in the eurozone. This is another tool in the toolkit. It is just one tool but when one combines it with all of the other parts of Ireland's offering and the roadmap for tax competitiveness, it places us in a strong position.

The Deputy asked if other countries had patent boxes. The United Kingdom, France, the Netherlands, Luxembourg, Belgium, Hungary, Portugal, Spain, Switzerland, Turkey and China have them, but ours is the only such box that is compliant with the OECD modified nexus. As a result, it is highly likely that the boxes in competitor jurisdictions will have to be updated, modified or changed. Luxembourg has announced that it is ending its box. The United Kingdom is now obliged to consult on updating its box and Spain has recently announced details of its updated box. Ireland is well positioned and IDA Ireland and the Government can now state proudly that people can come to this country, carry out research and development and avail of the knowledge development box knowing that it is fully OECD compliant and compliant with the new modified nexus.

The Deputy also asked about new research and development. That is a pertinent question. Anecdotally, we all know that more effort and time are being put into research, development and innovation. One of the hard facts is the increase in the amount being availed of through the research and development tax credit, which dramatically increased from approximately €290 million in 2012 to €430 million in 2013. This shows that an increasing number of companies, including Irish companies, are availing of the tax credit to carry out research and development in this country. We must continue to monitor this closely and ensure we are putting supports in place in order that Ireland can be competitive and proudly invite people to come here as a good location in which to conduct their research and development. We can also tell Irish indigenous companies that they can carry out their research and development here and that the Government and the State will support them.