Colm Brophy (Dublin South West, Fine Gael)
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72. To ask the Minister for Finance the estimated cost of reducing the VAT rate from 13.5% to 11% and 9% respectively for food and catering services, as well as all entertainment and hairdressing services; and if he will make a statement on the matter. [45969/24]

Jack Chambers (Dublin West, Fianna Fail)
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I am advised by Revenue that traders are not required to identify the VAT yield generated from the supply of specific goods and services on their VAT returns. Therefore, it is not possible to provide a costing for the measures outlined above using information provided on tax returns alone.

However, using third party data, tentative estimates of the full year cost to the Exchequer of the requested measures is provided below:

Colm Brophy (Dublin South West, Fine Gael)
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73. To ask the Minister for Finance the estimated cost of increasing the research and development tax credit by 5% and 10%; and if he will make a statement on the matter. [45970/24]

Jack Chambers (Dublin West, Fianna Fail)
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The Research and Development (R&D) corporation tax credit is a strategically important element of Ireland’s overall support for research and development activities. Irish R&D supports form part of a suite of measures that ensures Ireland remains an attractive location for both domestic and inward investment.

Ireland has successfully created a globally competitive innovation hub, and the R&D tax credit has played a large part in that success. Multinational firms in Ireland support thousands of Irish jobs, Irish companies and Irish education institutions. This is particularly encouraging for regional economies, with sectoral clustering evident, leading to significant benefits for local economies, business communities and third level institutions.

As part of Finance Act (No. 2) 2023 the rate of the R&D tax credit was increased from 25% to 30%. This increase in the R&D corporation tax credit rate preserved the net benefit of the credit for companies within the scope of Pillar Two. It also provided an increased support to companies (including micro and small sized companies) not subject to the new minimum tax rules thus encouraging increased engagement with the regime.

This year Finance Bill 2024 will increase the first year payment threshold from €50,000 to €75,000. This threshold is the amount up to which a claim can be paid in full in the first year, rather than paid in instalments over three years. These changes will provide a cash-flow benefit for smaller research & development projects and to encourage more companies to engage with the regime while maintaining the government’s focus on enterprise supports, to support productive and innovative businesses in the state.

I am advised by Revenue that the estimated cost of increasing the research and development tax credit by 5% and 10% is €230 million and €460 million respectively. These figures are based on 2022 data, where the credit was at 25% and there was a large increase in the Exchequer cost that year, which is expected to have arisen in part due to the restructuring of the credit in that year to meet new global standards for refundable tax credits, which resulted in a one-off acceleration of some payments into 2022. The R&D credit is a demand-led support and the annual cost fluctuates over time as a result of company R&D cycles.