Mr. Seamus Coffey:

It is only an opinion but I find it hard to imagine that the existence of the research and development credit is key to maintaining levels of foreign direct investment in the country. It probably plays some role for some companies and some activities but, given the overall portfolio of companies that are here, I doubt that the credit or that gap is central to their presence here. People may talk about a risk of a flight of foreign direct investment. At times, some of these suggestions have been pretty poorly founded and based on idle speculation rather than on fact. When it comes to much of the FDI in Ireland, we are not talking about companies that have been here for years or even decades. We are not talking about the companies that have been here for generations, having arrived in the late 1960s, the 1970s or the 1980s. These have been here for a considerable period of time. Ireland has advantages when it comes to the maintenance of that level of activity in that we have a reputation for delivering. That is why some companies in certain sectors including pharmaceuticals and manufacturing make multibillion investments in Ireland with regard to facilities and plant. The research and development credit has a role to play. I just hope it is generating additional activity. If it is costing close to €600 million a year, we need to be getting a net gain from it. The most recent review carried out by the Department of Finance related to 2016 and said that there was a gain. If this credit was perfect and if no activity had been subsidised, there would have been additional credit equivalent to four times the cost of the credit. That is if it was perfect and just generated entirely new activity. At that time, the Department found that the additionality was 2.4 times the cost, which is to say that approximately 40% of the activity would have happened anyway and that there was no need for the credit in those cases. However, a gain of 2.4 times the cost in additional activity is a gain.

Overall, it was a net benefit but that was in 2016.