Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputies. When we look at the knowledge development box, we should not think that it is the only thing the Government is doing to try to support research and development, and a high-innovation economy. We are, through may different investments, doing the kind of work to which Deputy Boyd Barrett has referred in our universities and places of higher education. That is funded directly by the Department of Further and Higher Education, Research, Innovation and Science. Much of the work to which the Deputy referred is happening. It is funded via expenditure, as opposed to tax expenditure, and it is overseen by the Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, and his Department.

The knowledge development box is comparatively small in the context of the kind of money that is correctly spent by the taxpayers in supporting research. That is illustrated by answering the questions that Deputy Mairéad Farrell put to me regarding the scale of the knowledge development box. I will do that before concluding by answering her question regarding why it is being extended in the way I am proposing. For 2016, the total cost of expenditure for the knowledge development box was €9.4 million, with a total of 12 claimants on it. For 2017, the budget was €10.3 million, with a total of 13 claimants. We expect to have the final figures for 2018 in the first half of 2021. The total cost is estimated to be €9 million with fewer than ten claimants. In terms of the scale of the tax expenditure and the number of companies that are accessing it, this is one of the smaller tax reliefs in place in our tax code.

Deputy Mairéad Farrell asked about the rationale for the scheme and its extension. The rationale for the scheme is to encourage companies to locate qualifying research and development activities here in Ireland and, by doing that, to encourage employment and more substantive operations within the State. It is being extended for two years in the context of uncertainty about a no-deal Brexit and some of the operational challenges that have been created due to Covid-19. It normally takes approximately two years to build up data for a relief such as this in order to allow us to evaluate its operation. We will have a new sunset clause on the knowledge development box of 31 December 2022.

That will allow the knowledge development box for a company to have been in operation for a period of time and then they will have claimed it for the two years after that, which should give us more information to evaluate its operation.