Seán Kyne (Galway West, Fine Gael)
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27. To ask the Minister for Finance if he will introduce taxation measures to stimulate investment and development on a regional level in a manner which will promote balanced regional development such as, but not limited to, tax relief on construction, the development of start-ups and so forth; and if he will make a statement on the matter. [1328/16]

Michael Noonan (Limerick City, Fine Gael)
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While there are no existing tax incentive schemes specifically relating to regional development, there are a number of provisions in the Tax Acts to stimulate investment and development. These would include:

- The Employment and Investment Incentive provides tax relief for investors who invest in qualifying SMEs and is closely targeted at job creation. Tax relief is available at an initial rate of 30% on investments of up to €150,000 per annum per investor. Companies may raise up to €5 million per annum, subject to a lifetime limit of €15 million. Shares must be held by investors for a minimum of 4 years. After three years, if employment levels have increased or the monies raised have been expended on R&D, a further 10% of tax relief is available. 

- SURE or Start-Up Refunds for Entrepreneurs (formerly the Seed Capital Scheme) provides a refund of income tax previously paid to qualifying entrepreneurs who start their own qualifying business. The refund of tax available is based on the amount of the investment made by the entrepreneur and the amount of income tax paid over the previous 6 tax years, subject to certain conditions. This scheme is intended to assist entrepreneurs to invest seed capital in order to commence trading. Once the company has commenced trading, they can then seek further investments under the EII.  

- The Start Your Own Business initiative provides an exemption from income tax for 2 years for individuals starting a new business where the individuals were previously long-term unemployed. The profits of such a business, up to a maximum of €40,000, are relieved from income tax in each year of the first two years of trading.

The Deputy may be aware also of a number of corporation tax relief measures which are available to all corporate taxpayers throughout Ireland, such as the R&D tax credit and the 3 year corporation tax relief for start-up companies.  While these are not specifically targeted at development on a regional level they would nonetheless be available to taxpayers in the regions to stimulate investment and development.

With regard to the overall question, any incentive targeting a specific location is likely to be subject to EU State Aid rules, and needs to be carefully considered in order to achieve the necessary results and obtain the necessary approval of the European Commission. Also, a tax incentive alone will have limited impact on regional development.

In addition, I would note that there is no provision under the EU VAT directive which allows for different VAT rates to be charged on depending on the region in which the activity takes place.

The Deputy may also be interested to know that there are non tax related measures in place to promote investment and development regionally. In particular up to the end of September 2015 the Strategic Banking Corporation of Ireland has lent approximately €110 million to c.3200 SMEs across Ireland. The vast majority of these loans, approximately 85%, were to regionally based SMEs outside of Dublin. The average size of these loans is about €35,000 and more than 90% have been for investment purposes.