Pearse Doherty (Donegal South West, Sinn Fein)
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To ask the Minister for Finance further to a report in a British publication which claims that a company (details supplied) has transferred US$7 billion of costs for intellectual property from Switzerland via Luxemburg to this State and is being given tax relief in this State equivalent to US$7 billion overtime, if the Revenue Commissioners are aware of same and have approved any such scheme. [45258/12]

Michael Noonan (Limerick City, Fine Gael)
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I am precluded from commenting on the tax affairs of any taxpayer, as these are confidential between the taxpayer and the Revenue Commissioners. However, I wish to advise the Deputy that, under section 291A of the Taxes Consolidation Act 1997, a company can claim allowances for capital expenditure incurred on the provision of intangible assets for the purposes of its trade. These allowances apply to expenditure on a broad range of assets (e.g. patents, copyright, trademarks, know-how) that are recognised as intangible assets under generally accepted accounting practice. The allowances, in providing relief for this expenditure, are intended to encourage companies to manage and develop the intellectual assets of their business.

Allowances for an accounting period are computed by reference to the amount charged to the profit and loss account in respect of amortisation of the intangible asset relative to its cost. Companies can alternatively opt for a write-down of expenditure over 15 years at a rate of 7 per cent per annum and 2 per cent in the final year. As the expenditures concerned - and, accordingly, the allowances - can be for very substantial amounts, the set-off of the allowances against the related income is restricted. In particular, the aggregate amount of allowances and deductible interest on borrowings, if any, in respect of intangible assets may not exceed 80% of trading income (before the set-off of allowances and any such interest) related to those intangible assets. This ensures that at least 20% of the relevant income will continue to be chargeable to corporation tax in an accounting period. Any unused allowances and interest can be carried forward to subsequent accounting periods for offset against trading income related to the intangible assets (subject to the 80% restriction) .