Pearse Doherty (Donegal, Sinn Fein)
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156. To ask the Minister for Finance the revenue that would be raised if a cap was introduced for companies to allow for a maximum write off of depreciation against income of percentages (details supplied) per annum regarding capital allowances on intellectual property. [39306/17]

Pearse Doherty (Donegal, Sinn Fein)
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157. To ask the Minister for Finance the revenue that would be raised if the 2014 rules of taxation for capital allowance of intellectual property were reinstated with regard to capital allowances on intellectual property. [39307/17]

Pearse Doherty (Donegal, Sinn Fein)
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174. To ask the Minister for Finance the estimated revenue that would be raised if a cap was introduced for companies to allow for a maximum write off of annual depreciation of intangible assets of percentages (details supplied) of annual income. [39521/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 156, 157 and 174 together.

The Review of Ireland’s Corporation Tax Code, which was undertaken by an independent expert, Mr. Seamus Coffey, was published on Tuesday, 12 September 2017.  In the Review, Mr. Coffey makes a number of recommendations in respect of Ireland’s corporation tax code, including a recommendation that a cap of 80% should apply to the amount of capital allowances for intangible assets, and any related interest expense, that may be deducted from income arising from intangible assets in an accounting period.  The use of such capital allowances and related interest expenses are already ring-fenced under current legislation - they can only be offset against relevant income arising from the intangible assets.  However, Mr. Coffey has recommended that a cap should also apply, in line with the treatment that applied prior to 2015, with the objective of ensuring some smoothing of corporation tax revenues over time. 

Of note, the re-introduction of a cap would affect the timing of relief in the form of capital allowances and related interest expenses for intangible assets but would not affect the overall quantum of relief.  This is because any amounts restricted in one accounting period as a result of a cap would be available for carry forward and utilisation in a subsequent accounting period, subject to the application of the cap in that period. 

As the Deputy will be aware, changes to tax law are generally made on a prospective basis such that they apply only from the date on which they have legal effect.  This would mean that intangible assets acquired prior to the date on which any cap is introduced in law would be ‘grandfathered’ and claims made by reference to those intangible assets would not be subject to a cap. 

I requested my Department and Revenue to look at the costings associated with the introduction of a cap on capital allowances for intangible assets and related interest expenses.  However, given the complexities involved, further analysis is required to quantify the tax revenues that might be generated as a result of introducing such a cap. Any change in law will be prospective and, therefore, any increase in tax revenues as a result of a restriction on the timing of the reliefs will depend on the scale of claims made in respect of future acquisitions of intangible assets, including any claims made as a consequence of the on-shoring of intangible assets currently held in other jurisdictions.