Emer Currie (Dublin West, Fine Gael)
Link to this: Individually | In context

221. To ask the Minister for Finance if, in line with the proposal in the new Action Plan on Competitiveness and Productivity, he will introduce an accelerate capital allowance or other tax measures to incentivise business investment in innovative technologies and digital transition. [50170/25]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context

I welcome the new Action Plan on Competitiveness and Productivity.

As a small open economy, connected to Europe, the US and the wider world, Ireland has been and is committed to a competitive, transparent and stable corporation tax system. The trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%, with larger corporate groups potentially in scope of the Pillar Two 15% Minimum Effective Tax Rate.

In addition to the 12.5% corporation tax rate, the Irish corporation tax system contains a number of broad tax measures designed to support investment and encourage transformations within business that will enable companies to be competitive in a dynamic market. The Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment (EEE), Angel Investor Relief and the Research and Development (R&D) Tax Credit are some examples of relevant tax measures, and which are not specific to any sector or industry.

The ACA EEE scheme is designed to improve energy efficiency among Irish companies by incentivising companies and sole traders to purchase highly energy efficient equipment. The ACA EEE scheme provides for 10 classes of technology including Information and Communication Technology. It provides for a 100% up-front wear and tear allowance for qualifying expenditure incurred in a given year. This provides a cash flow benefit to the taxpayer, as the allowances would normally be available over eight years at 12.5% per annum in the absence of either scheme. The energy efficiency criteria for the scheme are set by the Department of the Climate, Energy and Environment (DCEE) and the Sustainable Energy Authority of Ireland (SEAI).

Finance Act 2024 provided for the targeted Capital Gains Tax (CGT) relief for investment in innovative start-ups and SMEs, known as Angel Investor Relief. The relief aims to assist innovative start-up SMEs in attracting shareholder investment by offering a reduced rate of CGT which is available on a gain up to a maximum of twice the value of the investor’s initial investment.

The Irish R&D tax credit regime provides a 30 per cent credit in relation to expenditure incurred by companies in the carrying on of qualifying R&D activities. Qualifying R&D activities are systematic, investigative or experimental activities in a field of science or technology, being basic research, applied research or experimental development. The R&D must seek to achieve a scientific or technological advancement and involve the resolution of scientific or technological uncertainty.

The Programme for Government ‘Securing Ireland’s Future’ made a commitment to examine options to enhance the R&D tax credit, reward innovation and digitalisation. As part of this commitment a review of the R&D tax regime is ongoing, and consideration is being given to options to enhance the regime and incentivise innovative companies.

Any decisions regarding taxation measures are made in the context of the annual Budget and Finance Bill processes, at the appropriate time, and having regard to the sound management of the public finances.

There are also a wide range of non-tax government supports available to companies to assist with a digital transition project and invest in new technologies. However, it should be noted that, where any support measure is targeted at a specific industry or sector or specific activity, State aid implications need to be considered.