Thursday, 26 November 2015
Department of Jobs, Enterprise and Innovation
Knowledge Development Box
105. To ask the Minister for Jobs, Enterprise and Innovation the extent to which he expects the knowledge development box to continue to facilitate inward and indigenous investment, notwithstanding the competitiveness of the market place; and if he will make a statement on the matter. [42238/15]
A key objective of the Action Plan for Jobs process, which this Government commenced in 2012, was to rebuild our economy based on enterprise and entrepreneurship, talent, innovation and exports and provide a solid foundation for future growth. The recovery in jobs and exports to date is in large part due to the considerable improvements in the business environment for enterprise that have taken place in recent years. The measures announced by the Minister for Finance in Budget 2016 last month have further strengthened the attractiveness of Ireland as a place for entrepreneurship, innovation and investment. Government policies for Enterprise (including our ten year strategy Enterprise 2025 launched earlier this month) and Innovation set the framework for continued investment and support to establish Ireland as the best place in which to succeed in business – a place where businesses are innovative, competitive and productive, leading to growth that is sustainable and a higher standard of living for all.
The introduction of the Knowledge Development Box (KDB), in Budget 2016 forms part of Ireland’s competitive offering to continue to attract FDI and to support Irish owned companies to innovate and to compete effectively on international markets.
The KDB complements the existing suite of initiatives and supports available to companies that undertake R&D activities in Ireland across the lifecycle of research and development – including R&D tax credits, RD&I grant supports, support for technology acquisition (S291A), significant state investments in National Research Centres and knowledge transfer infrastructures, and advisory supports for accessing Horizon 2020 funding – providing a competitive proposition for business investment.
What differentiates Ireland in relation to the KDB is that we are the first country world-wide to offer an OECD compliant KDB offering. The certainty, predictability and clear signal that this sends to enterprise – including both Irish owned and foreign owned entities establishing and doing business from here - remains essential.
The OECD nexus approach sets out the principles and guidelines under which income arising from IP assets can qualify for a lower rate of tax under a KDB initiative. Ireland’s KDB rate is 6.25 percent (half of the corporation tax rate of 12.5 percent) and is internationally competitive.
The Knowledge Box, as announced in the 2016 Budget speech, will support and encourage both foreign and Irish owned enterprise to undertake research and development here, to protect the intellectual property that arises and to benefit from the measure. The Finance Bill also allows for the introduction of a provision pertaining to ‘Companies with income arising from intellectual property of less than €7,500,000’ which will be introduced during 2016 when the necessary legislation to give it effect is enacted and will be of direct benefit to companies of a relatively lower scale, with global income of less than €50 million. [Section 30, 769R]
I am very satisfied that the final shape of the Knowledge Box, as announced in the 2016 Budget speech, will contribute to Ireland’s competitive proposition to attract and retain FDI and to support and encourage SMEs to undertake research and development, protect the intellectual property that arises and benefit from the measure.