Brian Lenihan Jnr (Dublin West, Fianna Fail)

This amendment would introduce a provision requiring all claims for relief under the intangible assets scheme to be accompanied by an analysis demonstrating that the investment in specified intangible assets made a significant value added contribution to the investing company. Section 13 provides an important new incentive aimed at supporting the development of the knowledge economy. On Committee Stage I outlined the nature of the relief and the reason for it. To qualify for relief under the scheme, a company must be carrying on a trade and as part of that trade actively managing, developing or exploiting specified intangible assets. The passive holding and licensing of assets will not qualify for relief.

The Revenue Commissioners have issued guidelines on what activities constitute trading for the purposes of the 5.5% corporation tax rate. The criteria outlined in these guidelines will be followed by the Revenue in determining what activities are eligible for relief under the new scheme for intangible assets. If the need arises, these guidelines will be refined or enhanced as appropriate for the purpose of the scheme. Revenue will keep the operation of the new scheme under review to ensure that only those activities which constitute genuine trading activity on the part of the company incurring the capital expenditure will benefit under the scheme.

As is normal practice, the scheme will operate on a self-assessment basis and companies claiming a relief will be requested as appropriate to demonstrate to the Revenue that they are carrying on a trading activity that meets all the requirements of the scheme. Companies claiming relief under the scheme will be required to submit such claims in their annual tax returns. This will enable the Revenue to assess particular claims made by companies to track the overall amount of relief claimed and to evaluate the impact of the scheme. As I indicated on Committee Stage, I am also asking the Revenue Commissioners to provide information on the scheme in their annual report.

Also on Committee Stage Deputy Burton asked about an amendment to the legislation to provide for employment retention or specific job creation as a requirement under the scheme. I can understand the Deputy's concern but there are problems with this approach. A requirement of this nature would have EU state aid implications. The scheme is structured as a general measure not constituting state aid as it would be open to any company to avail of it. By introducing discretionary employment tariffs under the scheme, it would no longer be regarded as a general measure. This would introduce uncertainty as to the status of the scheme from a state aid perspective.

I am confident that the scheme will attract substantial trading activity in high quality employment in this economy. There are sufficient safeguards in the scheme in terms of the requirements for trading and the ringfencing from other activities to ensure that it will operate in an effective manner. I do not consider that it will be appropriate to have a prior certification process for individual applications under the scheme and because I am satisfied that adequate arrangements will be put in place to monitor and evaluate claims for relief, I do not believe the amendment is required.

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