Pat Breen (Clare, Fine Gael) | Oireachtas source

Before I speak on amendments Nos. 11 to 18, inclusive, I wish to reassure Senator Higgins in light of the comments she has made. One does not want to be too descriptive regarding the issues about which she spoke. That is important. If one is too descriptive, one confines oneself. Two years down the road, things could be very different and different information could be needed. In this regard, I draw her attention to the catch-all situation about which I have spoken and which is provided for in section 18(2). Subsection (2) provides for the KDB Bill report to include information on such matters as the Minister may direct. In addition, section 18(4)(h) provides for the KDB report to include such other statistical information as prescribed by the Minister. I wish to allay fears about this because I know Senator Higgins has done much work on the Bill and has been in constant contact with the Department.

I move to amendments Nos. 11 to 17, inclusive, which are quite interesting. I have listened to the rationale for the amendments tabled by Senators Higgins and Black but I do not propose to accept them. I will explain why. It might be useful to remind Senators of the intention behind the Bill. The Bill proposes the introduction of the KDB certification scheme for SMEs. The scheme is to be administered by the Patents Office. The process before the office involves the examination of applications to ensure that the invention, the subject of the application, meets the criteria of being novel, non-obvious and useful. At the end of this process, if the application meets these criteria, the office will grant a certificate. If not, the office will not issue a certificate. A certificate provides the gateway for SMEs to apply for the 6.25% corporate tax rate on profits arising from the invention. Granting of a KDB certificate does not, however, guarantee that the SME will qualify for this lower rate of corporation tax. The Revenue Commissioners will have to consider taxation returns on the basis of the provisions that apply to the KDB scheme introduced by the Minister for Finance in the Finance Act 2015, which came into effect on 1 January 2016. Revenue will, as always, have the ability to obtain the necessary information about the KDB to provide reliable information to the Government on the use of the KDB, including information on revenue forgone to the Exchequer.

I fully understand the Senators' desire to ensure ongoing monitoring and evaluation of existing schemes in the areas of research, enterprise and taxation. This is necessary to protect taxpayers' money and ensure that new schemes introduced provide the State with value for money. It is extremely important that we get value for money. I assure the Senators that the process of monitoring and evaluating all our research, enterprise and taxation schemes is ongoing with regular reviews. It must be as it is in the interest of taxpayers to have that transparency. In the case of the KDB, I remind Senators that the report on the taxation expenditures published with the budget in October 2015 provides for an ex anteevaluation of the KDB scheme. The evaluation outlines the basis of the best estimate of tax forgone of €50 million. The €50 million is in respect of all aspects of the KDB, not just the certification scheme aimed at SMEs.

On 18 January, my Department published a report on the economic and enterprise impacts from public investment in research and development in Ireland. The study presents evidence that points to a clear link between company engagement in research and development and stronger sales, exports and employment performance. This includes both Irish and foreign-owned firms supported by our enterprise agencies.

I remind Senators that this is a good Bill because it will increase Ireland's attractiveness for foreign direct investment, which is extremely important. I have just come back from a two-day trade mission to Dubai this morning, and the interest in Ireland regarding foreign direct investment and the interest in our indigenous companies is second to none. Research and development, which Senators have spoken about, is extremely important in every area because of the types of industries we have in Ireland, whether in med-tech, IT or whatever. The Government is investing in research and development. The Bill is important because it benefits our small businesses, about which Senator Mac Lochlainn spoke. Small businesses are very important in his constituency in Donegal. They are the backbone of the economy in rural Ireland. Giving small businesses this access is extremely important because we must ensure that innovation is the top priority. I have seen in my job that entrepreneurship is ripe. If all these elements are in place - this Bill, the companies that come in, irrespective of where they come from - it will increase investment in the country. What is also very important is that this will create jobs, which I think most Senators want. I can go into a little more detail afterwards if Senators have further questions about this.