Ireland in 'unique position' to lure global R&D with patent box move
Thousands of Irish small- and medium-sized businesses could benefit from new measures giving a tax break to companies that derive their profits from patents, it has been claimed.
Jobs Minister Richard Bruton suggested the so-called Knowledge Development Box (KDB) - with a rate of 6.25pc - will not only benefit Ireland's multinational sector but also encourage indigenous R&D and foster innovation among home-grown startups and SMEs. The rate is half the headline corporation tax rate of 12.5pc.
In the Budget, Finance Minister Michael Noonan said the KDB will be the first so-called patent box that will comply with new international rules ensuring that intellectual property is generated in the jurisdiction where the tax rate will be applied. The minster also announced measures that would require multinationals headquartered in Ireland to privately disclose their country-by-country revenue and profit activities following sweeping new international recommendations clamping down on global tax avoidance.
Mr Noonan said the KDB move will put Ireland in a "unique position" to offer certainty to industries planning their research and development investments.
"This significant enhancement to our corporation-tax regime shows Ireland's ability to retain our core strengths, while keeping a keen competitive edge in attracting quality jobs and investment to our country," he said.
Mr Bruton said the most "exciting" aspect will be that it will also provide support for smaller businesses, with details to be laid out in the Finance Bill.
"It will open up the use of such knowledge development boxes to smaller companies and I think that's the really exciting part of the proposal," Mr Bruton said.
A spokesman for the minister told the Irish Independent that about 2,000 SMEs could benefit.
PwC said that while the rate is attractive, the need to comply with international rules could pose problems and said the measure would have little impact. But the measure was broadly welcomed by tax experts from Deloitte and EY as boosting Ireland's investor offering.