Wednesday, 19 May 2021
Department of Finance
91. To ask the Minister for Finance if EU state aid approval for changes to the research and development regime in section 25 of Finance Act 2019 to better support the Irish SME sector has been granted; if State aid approval has issued; when he expects that he will make the order to give effect to the changes; and if he will make a statement on the matter. [26702/21]
In Budget 2020, I provided for the introduction of a number of enhancements to the R&D tax credit for micro and small companies, including an increase in the rate of credit and an enhanced method of calculating the payable credit.
These measures were introduced subject to a Commencement Order pending State aid approval from the Commission, given the targeted nature of the measures towards micro and small companies.
Officials in my Department initiated contact with the Commission last year on this matter and internal discussions are ongoing – progress has been hampered to some extent by Covid-related lockdowns. Therefore, the measures for micro and small companies have not yet been commenced.
The Programme for Government – “Our Shared Future” – recognises the importance of research, development and innovation as these are recurring theme across a number of the mission aims. Specifically in relation to Small Business Taxes, there is a commitment to continue to encourage greater take-up of the R&D Tax Credit by small domestic companies, by building on recent changes and examining issues with respect to the preapproval procedures and reduced record keeping requirements.
These issues will be examined by my Department, in conjunction with other Departments and stakeholders, in due course.
92. To ask the Minister for Finance if EU state aid approval for changes to the key employee engagement programme in section 11 of Finance Act 2019 to better support the Irish SME sector has been granted; if State aid approval has issued; when he expects that he will make the order to give effect to the changes; and if he will make a statement on the matter. [26703/21]
The objective of the Key Employee Engagement Programme (KEEP) is to assist small to medium size businesses in competing with larger companies when attempting to attract and retain key employees. The scheme offers a financial reward linked to the success of the company, an incentive that a potential key member of staff would not get at a larger company. KEEP has been in operation since 2018.
I introduced changes to KEEP in Finance Act 2019 to allow companies who operate through a group structure to qualify for KEEP; to allow for part-time/flexible working hours and movement by qualifying employees within group structures; and, to allow for pre-existing shares to qualify for KEEP. Finance Act 2019 provides for commencement of the relevant provisions by Ministerial order.
As KEEP is a notified State Aid, the changes made in Finance Act 2019 are subject to the State Aid process. The timeline for resolution of the State Aid issues is dependent on the European Commission (DG COMP); this process is continuing. My Department is hopeful that matters will be resolved soon thus enabling me to make the relevant order.