Leo Varadkar (Dublin West, Fine Gael)
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Question 51: To ask the Tánaiste and Minister for Finance if he will extend the research and development tax credit beyond its current limit; and if he will make a statement on the matter. [12618/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I understand that the Deputy, in referring to a "current limit", believes that there is a termination date for the Research and Development (R&D) tax credit scheme. At the outset, I should make it clear that there is no termination date for this scheme. As with all taxation expenditure, the scheme is subject to ongoing review and changes have been made to the scheme for this purpose over recent Finance Acts, including the 2008 Finance Act. This process of review will continue in order to ensure that the scheme continues to make a strong contribution to the Government's strategy to encourage the undertaking of more research and development activity in this country.

Under the scheme introduced in 2004, a tax credit of 20% of the incremental or additional spend on qualifying R&D as compared to R&D expenditure in a base year can be offset against a company's corporation tax liability. As originally envisaged, the base year for expenditure used to calculate the qualifying incremental expenditure on R&D was to be 2003 for the first 3 years of the scheme to 2006. In Finance Act 2007, the use of 2003 as the base year was extended for another 3 years of claim up to and including 2009. Budget and Finance Act 2008 extended this by a further 4 years to 2013. In addition, changes were made in Finance Act 2008 to provide that when the base year rolls forward for accounting periods after 2013, there will be a 10 year gap on a "look-back" basis between the year in which the tax credit is claimed and the base year expenditure for calculating the credit. For example, this means that for claims made under the scheme in respect of 2014, the base year expenditure will move forward to 2004 and so on.

These changes were made to provide an additional incentive for increased expenditure on R&D in future years and to offer more certainty to industry in relation to the tax credit scheme.

Willie Penrose (Longford-Westmeath, Labour)
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Question 52: To ask the Tánaiste and Minister for Finance if he will take steps to ensure that value added tax which is levied upon defibrillators is removed in the context of the importance of same and in particular in the further context where communities are making valiant efforts to ensure that a number of defibrillators are available throughout the community and whereby volunteers are undertaking training in the operation of same and whereby the imposition of VAT is an unnecessary charge levied upon this very worthwhile service; and if he will make a statement on the matter. [12678/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The position is that in matters relating to the VAT rating of goods and services, I am constrained by the requirements of EU VAT law with which Irish VAT law must comply. In this regard, I would point out that the rate of VAT that applies to a particular good or service depends on the nature of the good or service and not on the status of the consumer. In this case, there is no provision in EU law that would permit the removal or reduction of VAT based on the social or economic status of the consumer.

In relation to the VAT rate that applies to defibrillators, the position is that under the VAT Directive, Member States may retain the zero rates on goods and services which were in place on 1 January 1991, but cannot extend the zero rate to new goods and services. The zero VAT rate cannot therefore be applied to defibrillators which are subject to the standard rate.

In addition, Member States may only apply the reduced VAT rate to those goods and services which are listed under Annex III of the VAT Directive. While Annex III does include the supply of medical equipment for the exclusive personal use of a disabled person, it does not include defibrillators for general use. The reduced rate cannot be applied to the supply of defibrillators.

Therefore the only rate of VAT that can apply to the supply of defibrillators is the standard VAT rate which in Ireland is 21%.