Jim Daly (Cork South West, Fine Gael)
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Question 111: To ask the Minister for Finance the percentage of the €50 million patent income tax exemption claimed in 2010 that was availed of by multinationals versus the amount claimed by Irish small and medium enterprises; and if he will make a statement on the matter. [25907/11]

Michael Noonan (Limerick City, Fine Gael)
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The termination of the tax exemption for royalty and other income arising from qualifying patents came into effect from 24 November 2010 at an estimated full year yield of €50 million.

The decision to abolish the relief was taken in the light of a recommendation to this effect by the Commission on Taxation. As part of its review of all tax expenditures, the Commission on Taxation examined the relief for patent income to determine if its continued operation was justified on cost benefit grounds. The Commission found that the relief had not had the desired impact on innovation and R&D activity and that, despite various refinements to the scheme over the years, it was not a particularly well-targeted measure providing good value for money.

The R&D credit scheme provides a more direct and effective incentive for enterprises to innovate and invest in R&D activities and the scheme has been enhanced considerably in recent years to make it one of the most competitive of its kind anywhere.

I am informed by the Revenue Commissioners that information in relation to claims for patent income exemption is derived from corporation tax returns and income tax returns. Based on the information that has been provided in the tax returns for the tax year 2009, the latest year for which the necessary detailed data are available, the total cost to the Exchequer of the patent income exemption was €72 million, of which approximately €16 million was associated with claims from companies.

I am also informed by the Revenue Commissioners that statistics on the amount of patent income exemption claimed by multinational corporations is not separately available. However, it is likely that many of the larger claims of patent income exemptions by companies are claimed by large multinational companies.

Data for the year 2010 is not yet available as the bulk of tax returns for that year are not yet due.