Thursday 19 October 2017

Revenue gets €57m back in R&D repayments

Finance Minister Michael Noonan
Finance Minister Michael Noonan

Gordon Deegan

The Revenue Commissioners recouped over €57m in reclaims from companies in the Government's Research and Development (R&D) tax credit scheme over the past five years.

New figures provided by the Minister for Finance, Michael Noonan, show that Revenue dramatically ramped up its activity in the area to open investigations into 276 cases last year.

That's a 55pc increase on the 178 cases investigated in 2015. Last year, Revenue yielded €13.7m from payments made in 100 interventions.

This followed €13.5m yielded from 162 interventions in 2014. The yield to the Revenue from 105 interventions totalled €14.4m in 2013 and €5.4m from 49 interventions in 2012.

The number of cases over the five years where payments have been made totals 327.

The spend by the companies on R&D to qualify for the tax breaks totalled €4.23bn in 2015 and €4.5bn in 2014.

Minister Noonan provided the figures in a written Dáil reply to Fianna Fáil's Finance spokesman, Michael McGrath. A report by the comptroller and auditor-general (C&AG) last year revealed that more than €550m in corporation tax had been foregone due to the tax break.

"We certainly cannot allow any pattern to develop whereby the R&D system is abused," Mr McGrath said.

"Having a taxation system that incentivises research and development activity is an important element of Ireland's inward investment offering and we are competing with many other developed economies in that regard. "

He added: "Given the amount of tax foregone as a result of the R&D tax credit system, it is understandable that it is an area of focus for the Revenue.

"The increase in the number of cases where Revenue intervention resulted in tax having to be refunded to the State is a concern."

The number of beneficiaries of the R&D tax credit scheme increased from 73 companies in 2004 to around 1,400 in 2014.

The tax break was introduced in the Finance Act 2004, where credit is given at a rate of 25pc of qualifying expenditure and can be claimed by companies undertaking in-house R&D within Ireland.

A spokeswoman for Revenue said yesterday: "Due to the technical nature and increase in the beneficiaries of R&D tax credits, Revenue has increased its compliance activity in this area, as is evidenced by the increase in compliance interventions from 26 in 2011 to 276 in 2015."

Irish Independent

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