Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I move amendment No. 71:

In page 92, after line 39, to insert the following: "Report on the Research and Development Tax Credit Regime

37.The Minister shall, within six months of the passing of this Act, prepare and lay before Dáil Éireann a report on the research and development tax credit, its operation, its use among small and medium enterprises and options to enhance and simplify its use for indigenous enterprise and in the context of environmental research and innovation.".

This is in relation to the research and development tax credit. It calls on the Minister to produce a report within six months to lay before the Houses of the Oireachtas on the research and development tax credit, its operation, its use among small and medium enterprises and options to enhance and simplify its use for indigenous enterprises and in the context of environmental research and innovation. This is timely. The Minister knows that Sinn Féin has been calling for an enhanced research and development tax credit regime for small and micro businesses. In fairness, the Minister brought it forward in budget 2019. We wanted to see the rate increased to 30% for small and micro enterprises. It is disappointing it had not taken effect despite it being legislated for two years after it was announced. The Minister said in response to me that it had not received state aid approval and that for it to receive state aid approval would require overly burdensome changes on businesses and revenue. This is very disappointing.

I am strongly of the view that we need to ensure more small, medium and micro businesses are involved in research and development. I would like to hear from the Minister on whether he has an update on this measure, which we called for and supported. In fairness, the Minister legislated for it. Is it now a dead duck or will we go back to the Commission and look for a way to introduce it without being too burdensome so it would not be a drain on small and medium enterprises or micro businesses?

There is no doubt that we need to support research and innovation among small businesses. We need to help them to scale up. We want to see changes to the research and development tax credits regime that would provide it. One was the idea of a higher rate for these companies. The second proposal we have been putting forward, and I ask the Minister to look at it, is that under the current system companies whose research and development tax credits exceed their tax liability receive the credits in three instalments over 33 months. We believe this acts as a disincentive for take-up among small and medium enterprises. We would like to see it changed for small and micro-companies, with credits paid out in one instalment in one year. It would only be a cash flow issue because the companies would still be entitled to it over a longer period of time. The estimate we received from Revenue on the cost of the first year of operation is €25 million. As I have said, this is primarily a cash flow issue. I would like to hear the Minister's view on this type of proposal. I believe it would improve the cash flow position of indigenous businesses that would engage in research and innovation and increase the uptake of the tax credit to support companies that are crucial to our economic future and the success of our economy.

The amendment calls for a report. We will go through the motions in terms of the restrictions on the Opposition with regard to the Finance Bill. At the heart of the amendment, as with previous amendments, is the view that we need to do more to encourage research and development in small and micro-enterprises. Are we giving up on the higher rate for small and micro businesses? This is already legislated for. Is there a way around it in the Minister's view? The other proposal we are putting forward is that those companies with research and development credits that exceed their tax liability would be able to be paid in one instalment in one year instead of three instalments over 33 months.