Mr. Seamus Coffey:

The recent figures from the Revenue Commissioners were surprising. They put the cost of the knowledge development box for 2016 at €5 million with fewer than ten claims. This does suggest that the uptake is very low. As the Deputy has said, it is possible for companies to make claims in respect of that tax year for another couple of months so that figure might grow, but I cannot see it growing that significantly. It may be that it takes time for these things to bed in. It might not be possible for companies to claim it quickly, within a year or two. It might take two, three or four years before we see the full impact of the scheme. Today's figures on the low uptake, particularly among domestic companies, were surprising.

The knowledge development box was announced with great fanfare back in 2014. It is now OECD compliant, which means that it follows the modified nexus approach in that it only applies to expenditure on activity in Ireland. When it was initially introduced it was felt that it would cover all research and development spending made from Ireland, whether the activity was carried out here or not, but over time, our knowledge development box or patent box has become OECD compliant. Other EU countries have non-compliant patent boxes which apply to all spending and do not follow the modified nexus approach but ours does. Perhaps it is taking a while for companies to start the activity and to generate the profits. One can do the research and development but the benefit of the knowledge development box is that one gets a 6.25% effective rate rather than the 12.5% rate. Perhaps it just takes time, but I admit that I am surprised by the low level of claims we have seen in the Revenue figures to date.