Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance if he has explored the potential for a patent box similar to that in operation in Britain and the Netherlands; if he has, if any estimates have been undertaken of tax that would be forgone if such a provision was made, or if there would be a tax gain from attracting companies to this tax jurisdiction. [42193/12]

Michael Noonan (Limerick City, Fine Gael)
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The development of the knowledge economy is seen as essential for generating new jobs. In particular, research and development and innovation are of vital importance in increasing economic activity both in terms of domestic business sectors and in attracting foreign direct investment.

Many countries are continuing to develop fiscal policy tools to promote investment in intellectual assets. Jurisdictions are increasingly in competition with each other to attract global businesses seeking advantageous locations for developing and commercialising intellectual property.

My Department is aware that other countries have recently introduced patent box schemes, including those available in the UK and the Netherlands. The general objective of such schemes is to provide a lower rate of tax on income derived from patents and other intellectual assets that are developed and commercially exploited by companies, generally by deducting or excluding a certain percentage of income from the tax base.

In considering the merits of introducing a patent box scheme in Ireland, it is important to bear in mind that countries which have introduced such schemes have corporation tax rates that are significantly higher than our general 12.5% corporation tax rate for trading income. Alongside the 12.5% rate, Ireland provides attractive incentives to encourage R&D and the creation and exploitation of intellectual property, including a 25% tax credit for R&D expenditure. In addition, Ireland has a comprehensive capital allowances regime for expenditure on the provision of intangible assets for use in trading activities. While my Department has not, at this stage, undertaken any estimates of the cost of introducing measures similar to those in the UK and the Netherlands, it will continue to keep Ireland’s tax offering under review to ensure that it remains competitive and effective in promoting investment in R&D, innovation and high-quality employment.