Fiona O'Loughlin (Kildare South, Fianna Fail) | Oireachtas source

I welcome the Bill which I believe is very important. There is no doubt that our small and medium business enterprises are the backbone of the country. They are the backbone of the economy and they are of key importance to the development of towns, cities and regions. There is no doubt that entrepreneurs play a vital role in our society. It must be acknowledged that they kept the country going throughout the recession. They were the ones who worked hard, provided employment, took the risks and were able to pay their bills so that the State in turn could pay our gardaí, teachers, nurses and so on.

We need to develop a full set of policies that are strongly supportive of our SME structure. We need fully functioning support mechanisms for them. It is good to see that the economy is evolving. The business assets produced by investment in knowledge based capital such as intellectual property are becoming a significant driver of economic growth not only in Ireland but in all of the OECD countries. The overall aim of this legislation is to encourage Irish SMEs to invest in research and development activities by providing for a reduction in the tax they pay on earnings for the intellectual properties they create. There is a significant amount of research funding available for this measure. We need to encourage our businesses to avail of it, where possible. Currently SMEs in this country employ over 900,000 people, which is a decrease of 16% on the number of people employed in this sector ten years ago. Ten years ago, in 2007, there were 1.09 million people employed in this sector. The population is growing and developing yet our SME sector is down 16%. That is something for us to reflect on in terms of all the different areas in which we can develop supports for SMEs.

This Bill will help SMEs to avail of the Knowledge Development Box taxation scheme on profits relating to research and development activity. It is worth reiterating that the reduced corporation tax rate will be 6.25%, which is half the current 12.5% rate. That is to be welcomed. When this scheme was announced in October 2014 the main target was multinationals. It is a shame that we have had to wait until now for the Government to come forward with primary legislation to enable SMEs to access that tax scheme. Fianna Fáil believes that we should not be focused only on the multinationals and that we need to have a balanced and equal approach to incentivising job creation in all sectors. This includes the indigenous sector as well as foreign direct investment. Given how exposed Irish exporters are to a hard Brexit this is yet another example of a slow response on the part Government pre and post the UK referendum in taking every measure at its disposal to safeguard Irish SME business and employment, which is very dependent on the United Kingdom.

This Bill amends the Irish Patents Act 1992. From 1 January, patent applications must be accompanied by a report incorporating a written opinion as to the patentability of an invention. It is noteworthy that this extends the knowledge box definition of intellectual property beyond patents and copyrighted software to what is known as the intellectual property equivalent of a patentable invention. It is good that this will permit Irish SMEs to include inventions that are certified as novel, non-obvious and useful.

With the United Kingdom planning to reduce its corporation tax to 17% by 2020, there is no doubt that the Irish Government needs to use every available tool to make the current regulatory landscape here more attractive to new businesses and entrepreneurs. Regrettably, budget 2017 failed this test. Fianna Fáil is disappointed that the United Kingdom will still have a more attractive CGT relief which applies 10% to entrepreneurial gains of up to £10 million sterling or €10.9 million, which is far in excess of our €1 million limit. In the meantime, Ireland has continued to plunge in the World Bank's rankings in terms of ease of doing business, having dropped to 18th place across 190 economies in the World Bank's 2017 report. The Taoiseach's target for 2016 was to make Ireland the best small country in the world in which to do business. Sadly, he has failed to achieve that. That said, Fianna Fáil welcomes this Bill and will support it. We look forward to making amendments to the Bill on Committee Stage to ensure what is provided for in it becomes a reality.

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