Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

In last month's budget I announced several changes to Ireland's corporation tax regime as part of an overall strategy to play fair and win. This included a change that will bring Ireland's company residence rules into line with those in the rest of the OECD and end the so-called double Irish scheme. This was balanced by a number of competitive enhancements contained in the roadmap for Ireland's tax competitiveness.

This strategy was underpinned by extensive research undertaken and commissioned by my Department in 2014, which has now been published. One of the key findings of the research is that the FDI sector is very important for economic growth and employment in Ireland and that Ireland needs a competitive corporate tax offering to attract foreign direct investment. In particular, we need to ensure a competitive offering for knowledge-based investment which is related to research and development and intellectual property.

In recognition of the fact that investment and growth in OECD economies is increasingly driven by investment in intangible assets, putting in place an attractive intellectual property offering is key for Ireland's success in attracting foreign direct investment. That is why I made a clear statement on my intention to introduce a competitive income-based regime for intangible assets in Ireland which will be called a knowledge development box, KDB. I view this as a positive measure for Ireland and my intention is that the Irish KDB will be among the best in class on offer internationally. In order to gather views from as broad a spectrum as possible on what this may entail, I will launch a public consultation process before the end of the year on how the Irish KDB should operate.

As is the case with all public consultations undertaken by my Department on corporation tax, input has been welcomed from all sections of society. A number of parties came forward to give their views on the public consultation on the OECD base erosion and profit shifting process - the so-called BEPS project - from earlier this year, including groups which represented multinationals based in Ireland, political parties, non-governmental organisations and individual citizens. I expect the consultation on the KDB to be no different and encourage all interested parties to have an input into this process.

It is the intention that the design of the KDB in Ireland will be along the lines of what are commonly known as patent boxes which have been in place for many years in countries which compete with us for foreign direct investment. The measures in place in our competitor jurisdictions are the subject of ongoing discussions at the OECD and EU levels as regards their compatibility with the international rules around fair tax competition. As I said in my budget announcement, it will be necessary to ensure the Irish KDB meets the standards that remain to be agreed to by both the OECD and the European Union.

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