Mr. Eoghan Quigley:

The question was broadly on retaining the credit and the Deputy mentioned costings of €700 million. He asked why we should incentivise Apple in its creation of the iPhone 11. The overall contribution of foreign internationals to our economy has been quite spectacular. We are a small peripheral economy on the edge of Europe and the multinationals located here and spending money here have been the bedrock of our economy. In the past number of years, the focus has been on having real substance in countries. Given that we want to be a knowledge-based economy, in order for us to attract that substance we need to attract the development of intellectual property, IP, because it is with IP that jobs come. The €700 million cost in tax is exceptionally good value in terms of the jobs it brings into the economy. The credit is for qualifying expenditure, which is typically expenditure on high-paid, skilled workers. Multinationals typically have a cluster of people and will bring further projects, or the skills will already be here and available for the SME sector and the broader economy. The sum of €700 million for the research and development credit is extremely good value in helping to embed multinationals and it should be protected.

Our submission focuses on making research and development tax credit more attractive for SMEs. For early stage companies, the most important thing is cash. The tax credit offsets against corporate tax for the larger multinationals but SMEs often do not pay tax. They typically get a staggered payout, over three years, of the tax credit against PAYE but we suggest bringing this forward. We also suggest lifting the 25% credit to 30% for SMEs to support the sector. Instead of its cost, we should consider the stimulative impact of research and development tax credits on the economy.