Michael McGrath (Cork South Central, Fianna Fail)
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161. To ask the Minister for Finance the impact for the development of an Irish knowledge development box of reports that the UK and Germany have agreed to phase out their respective patent box tax incentives; and if he will make a statement on the matter. [43896/14]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy may recall that as part of my Budget announcement I made a clear statement of my intention to introduce a competitive income-based regime for intangible assets in Ireland, in what will be known as a "Knowledge Development Box" or "KDB".

I view this as a positive measure for Ireland and I will ensure the Irish KDB will be among the best in class on offer internationally.  The design of this measure will be broadly along the lines of patent boxes which have existed for many years in countries that compete with us for Foreign Direct Investment.

At present, the measures that are in place in some other jurisdictions are the subject of on-going discussions at the OECD and EU level, with regard to their compatibility with the international rules around fair tax competition.

As I said in my Budget speech, Ireland's Knowledge Development Box will adhere to the OECD/EU rules on such regimes once those rules are agreed.

Last week, Germany and the UK announced that they have developed a joint proposal on the rules for tax regimes for intellectual property which will be submitted to the OECD Forum on Harmful Tax Practices for discussion during its meeting in November.

It is notable that the approach seeks to ensure that regimes for intellectual property will require economic activities to be undertaken in the jurisdiction in which the regime exists.  In terms of the implications for the future development of Ireland's Knowledge Development Box, this approach accords with Ireland's overall FDI strategy and corporation tax policy which is focussed on attracting investment that is accompanied by real and substantial business activity.

Further work will be required in order to enable agreement on the issue by all OECD members during 2015 and Ireland looks forward to a resolution of the uncertainty around acceptable criteria for patent boxes and looks forward to engaging in such discussions.