Michael Noonan (Limerick City, Fine Gael)

The scheme was not abolished in an arbitrary fashion or by political or administrative decision but only after a full review by the Commission on Taxation. The commission's view was that while the relief provided additional windfall taxes to persons who registered patents, it did not act as an incentive for additional research and development, as was its objective in the first instance. Current provisions regarding tax relief for research and development cover not only the original incentive provided by patent royalty exemption but also have a much broader impact and are recognised internationally as a significant incentive for research and development.

Nevertheless, while not holding out any hope of reversing what was done last year, I will re-examine the scheme along the lines of Deputy Jim Daly's proposal to see whether it could be focused on companies which are inventive but have small turnovers. Any reinstatement of the relief would apply only to a small tranche of income. I am not sure whether it will be possible to take this approach given that such incentives generally must apply to everybody. However, it may be possible to confine it by way of cap. The previous threshold of €5 million was very high.

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