Michael McGrath (Cork South Central, Fianna Fail)
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There are no specific provisions for indigenous SMEs in the R&D tax credit, and nor are there any restrictions for indigenous SMEs wishing to avail of the scheme. It is available to all firms, within the charge to Irish tax, that undertake qualifying R&D activities. However, I am aware that Revenue issued updated guidance in 2017 with the specific aim to reduce the administrative burden for relatively small claims for SMEs and micro-companies.

The administration of the R&D tax credit is a matter for the Revenue Commissioners. The Tax Administration Liaison Committee (TALC) Sub-Committee on Simplification and Modernisation of Business Reliefs for SMEs provides a forum where Revenue and tax practitioners can identify opportunities to simplify and modernise the administration of business supports. The matters discussed by the sub-committee, which include the R&D tax credit, will inform recommendations in relation to administrative changes which may benefit SMEs.

I am also aware that Revenue participate in a number of initiatives to ensure that the availability of the R&D tax credit, and the activities in respect of which it is available, is communicated to firms of all sizes. For example, Revenue attend and speak at R&D events organised by IRDG, the IDA and Enterprise Ireland. Revenue has also established an R&D discussion group which provides a forum for Revenue and representative organisations to raise and address issues affecting the operation of the R&D tax credit.

I would also note that the refundable nature of the R&D tax credit can be particularly attractive to start-up companies or SMEs which are not making profits as the credit can effectively part-fund the R&D activity and act as a valuable source of cash-flow.

Finally, the Deputy may be aware that Finance (No.2) Act 2023, also introduced changes to the R&D tax credit which will benefit SME claimant companies and companies undertaking smaller R&D projects. For accounting periods commencing on or after 1 January 2024, the rate of the credit has increased from 25% to 30% and the threshold for payment of the credit in full in the first year rather than over the usual period of three years was increased from €25,000 to €50,000.