Tuesday, 10 October 2017
Financial Resolution No. 3: Intangible Assets
Mr. Seamus Coffey's report stated the increase in corporation tax receipts can be expected to be sustainable up to and including 2020. However, to ensure some smoothing of the corporation tax revenues over time, it was also recommended the deduction for capital allowances for intangible assets and any related interest expense be reduced to 80% of the relevant income arising from the intangible asset in an accounting period. The Minister for Finance has taken on board this recommendation and is implementing it for claims made in respect of expenditure incurred by a company on intangible assets from midnight tonight.
The 80% cap will affect the timing of the relief in the form of capital allowances and related interest expenses for intangible assets. It will not affect the overall quantum of such relief. This is because any amounts restricted in one accounting period as a result of the cap will be available for carry-forward and use in a subsequent accounting period, subject to the application of the cap in the course of that period.
Notwithstanding that this is a timing issue, it is estimated the introduction of the 80% cap will raise an additional €150 million in 2018. To ensure fairness and that matters are clarified, it is not proposed there should be any period of uncertainty about this measure. That is why it is proposed to apply from midnight tonight. It is intended to put today's changes on a permanent statutory footing in the context of the forthcoming finance Bill.
I commend the resolution to the House.