Gerald Nash (Louth, Labour)
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214. To ask the Minister for Finance his plans to increase the take-up of the research and development tax credit by small domestic companies; the take-up rate for micro, small, medium and large companies, respectively in tabular form; and if he will make a statement on the matter. [14610/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Research and Development (R&D) tax credit allows companies to claim a 25% tax credit in respect of expenditure incurred on qualifying R&D activities. In making a claim for the R&D tax credit, companies must satisfy two tests: the activity must be a qualifying activity (a science test); and the amount of the claim must be based on R&D expenditure incurred (an accounting test). A claim for the R&D tax credit is made on a self-assessment basis.

Revenue have taken a number of steps in recent years to assist companies with making claims for the R&D tax credit, particularly small and micro companies. In February 2017 Revenue issued guidance aimed at reducing the administrative burden for small and micro companies in relation to claiming the R&D tax credit. The aim of this guidance is to give smaller companies greater clarity on how they can demonstrate to Revenue that their R&D tax credit claim satisfies the science test. Where a company spends up to €200,000 on activities which Enterprise Ireland or other such bodies have reviewed and confirmed as R&D, then in most cases Revenue will accept that those activities pass the science test. Revenue may still review the claim to ensure that the accounting test has been satisfied.

To further assist companies in making R&D credit claims, in 2019, Revenue published updated guidance on the operation of the R&D tax credit and the expected level of records to support a research and development tax credit claim. Revenue has also presented at conferences around the country, which are attended by companies, advisors and educators, to build awareness of the R&D tax credit.

I am advised by Revenue that statistical information on the research and development credit is published at: www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/r-and-d-tax-credits.aspx.

This includes a breakdown by size of the claimant company on pages 7 and 8.

The Government is conscious of the importance of SMEs to the economy, and also recognises the unprecedented impact that the Covid-19 pandemic is having, placing strain in particular on small and micro businesses. The Government has put in place a suite of measures to assist SMEs during these difficult times, including a major expansion of supports in liquidity measures to help viable businesses affected by Covid-19 pandemic.

The Government has further committed to a series of immediate actions to support the economy to return to capacity – the ‘July Stimulus’. The main tool for this will be the Recovery Fund and further details will be announced in the coming weeks.