Sean Barrett (Independent)

The recommendation refers to patents. I thank the Minister for his physics lecture. We will put it in the research and development section.

The Commission had strong views on tax exemptions on patent royalties. It stated: "We have reservations about the effectiveness of the measures in incentivising companies to engage in R&D activities in Ireland. We are of the view that the relief has not resulted to any great extent in companies carrying out R&D activity." Where it was being used by such companies in some cases it was used as a tax avoidance device to remunerate employees. Everybody in the House has expressed a fear that the measure will turn into a tax avoidance scheme.

Section 12.4 refers to the tax exemption for patent royalties. The Minister expressed misgivings about other matters. The Commission put a caveat against proceeding with the measure, particularly given the fact it is sometimes used as a tax avoidance measure. Outputs are always desirable, but we have to consider whether we get them and if they are commensurate with costs.