Bernard Durkan (Kildare North, Fine Gael)
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210. To ask the Minister for Jobs, Enterprise and Innovation the extent to which she expects the knowledge development box to protect Irish interest in the international jobs investment market; and if she will make a statement on the matter. [14679/17]

Mary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
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As set out in the Action Plan for Jobs 2017, which was co-ordinated across Government by my Department, protecting our interests in the international jobs investment market continues to be a priority.  Ireland will continue to provide a competitive offering for mobile investment, including tax offering, and to ensure that our innovative entrepreneurs establish and scale in Ireland so as to provide jobs for our citizens and contributes to funding the provision of services.

Ireland is the first country world-wide to introduce an OECD compliant Knowledge Development Box (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. This certainty has become even more important in the current dynamic and uncertain geopolitical landscape.

The KDB, introduced in Budget 2016 forms part of Ireland’s competitive offering to continue to attract foreign direct investment (FDI) and to support Irish owned companies to innovate and to compete effectively on international markets. The Government and I are satisfied that the Knowledge Development Box will protect Irish interest in the international jobs investment market and will continue to benefit the Irish economy.

The continuing imperative to establish Ireland as the best place in which to succeed in business is reinforced in our national Enterprise and Innovation strategies. Our aim is that Ireland will be recognised as the place where businesses are innovative, competitive and productive – leading to growth that is sustainable and results in employment opportunities and a higher standard of living for all. These strategies set out the framework for investment over the coming decade to ensure that Ireland remains equally attractive to foreign direct investment and to Irish entrepreneurs and growth businesses in the context of an intensely competitive international environment.

The Knowledge Development Box provides an effective 6.25% rate of corporation tax on profits from certain qualifying assets that are earned by a company, chargeable to corporation tax in the State, to the extent that the assets relate to R&D undertaken by that company.  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 effective rate is 6.25 percent (half of the corporation tax rate of 12.5 percent) and is internationally competitive.

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.

It is important to highlight that the Knowledge Development Box will benefit companies of all sizes.  To ensure maximum access the Knowledge Development Box (Certification of Inventions) Bill 2016 will apply to certain small and medium sized companies to avail of the Knowledge Development Box without the need for public disclosure of their innovative concept.  Under the new scheme, the Patents Office will be the body certifying applications for inventions under the new certification scheme to check that they meet the criteria of being novel, useful and non-obvious. The Bill is intended to open up the opportunity for companies across a broad spectrum to pay lower taxes on profits from Irish-based research and development activities. This includes companies in incubation units right through to high-potential start-ups in all industry sectors once they are generating income resulting from research and development activities. The scheme should serve to significantly boost Irish innovation and investment in research and development.   

This Bill will be in the Dáil for Reporting and Final Stage next week.