Mr. Ger Gibbons:

The group said that it expected the cost to increase further. Looking at the figures that are available, the total estimated cost is approximately €2.8 billion between 2016 and 2020. Some 70% of the 2020 cost was claimed by approximately 200 large corporations.

We are not saying that there is no role for a research and development tax credit but considering what happens in other European countries, similar tax credits play a much smaller role. This has been repeatedly flagged in European Commission assessments of this particular scheme. The Commission’s country report in the past year recommended reducing reliance on the research and development tax credit and providing more direct support to SMEs. One of the issues that comes up again and again, which he we hear from our side, is that SMEs find it difficult to access this credit. We believe it would be much better to promote more direct support to SMEs, fostering co-operation in research, development and innovation.

This kind of recommendation was endorsed by the Council of the European Union in the past year. It effectively urged Ireland to use more direct funding instruments instead of the research and development tax credit.

The point we make is that it is not clear that the emphasis in other chapters of the report on being careful about tax credits is reflected in this particular chapter for this particular tax break.