Mairead Farrell (Galway West, Sinn Fein)
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64. To ask the Minister for Finance the estimated qualifying expenditure against which capital allowances have been claimed with respect to data centres and the estimated revenue foregone as a result since 2014; if his Department will undertake an analysis of the use of capital allowances with respect to data centres in the context of the State’s climate action objectives and energy capacity; and if he will make a statement on the matter. [44878/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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In June 2018, the Department of Enterprise, Trade and Employment published the ‘Government Statement on the Role of Data Centres in Ireland’s Enterprise Policy’, which sets out the strategic importance of data centres to Ireland’s overarching enterprise policy and to the attraction of foreign investment in the ICT sector. The Statement acknowledges that, as large consumers of electricity, data centres pose challenges to the capacity of our electricity grid and the future planning and operation of a sustainable power system.

The Government is currently preparing a new Climate Action Plan that will address, amongst other objectives, our ambition to further decarbonise our electricity system. We will seek to further decarbonise our electricity grid while simultaneously pursuing the electrification of sectors such as transport and heating and, crucially, preserving our security of supply and the reliability of our grid.

Arising from the Climate Action Plan, the Minister of Enterprise, Trade and Employment has indicated that the ‘Government Statement on the Role of Data Centres in Ireland’s Enterprise Strategy’ may need to be revised to reflect new policy and regulatory developments, ongoing challenges and potential opportunities facing the sector. The Government will seek to ensure that this important infrastructure for our wider technology sector and information based economy can be facilitated sustainably, and also that new data centre developments can be harnessed to drive the decarbonisation of our electricity system and deliver regional economic opportunities.

With regard to taxation, businesses may claim capital allowances on capital expenditure incurred on certain types of business assets and business premises. Capital allowances allow the wear and tear of plant and machinery be taken into account as a deduction for tax purposes. In general, such capital allowances are claimed at a rate of 12.5% annually, over eight years.

I am advised by Revenue that data centres are not separately identifiable on Revenue records. Nor is information captured on the nature of the claims for capital allowances by data centres in a manner that would enable the Deputy’s questions on specific activities to be answered.

Information is available on a sectoral basis, and Figure 6 of Revenue’s annual paper on Corporation Tax Payments and Returns provides a sectoral breakdown of capital allowances claimed on 2019 corporation tax returns, including information in respect of capital allowances claimed by the wider Information and Communication sector, which may be of interest to the Deputy.

The paper is available on the Revenue website at: