Irish SMEs will get chance to avail of lower corporation tax, says Minister
Minister Mary Mitchell O’Connor has announced that new legislation will allow Irish SME’s involved in research and development activities to avail of a lower corporation tax rate of 6.25% in a bid to further incentivise innovation in the country.
Under the scheme, profits from Irish inventions resulting from R&D activities in Ireland will be taxed at 6.25%. This will be made available to small and medium enterprises through a certification process overseen by the Patents Office.
Mitchell O’Connor says: “The aim of this is to boost and encourage Irish-based innovation. Developing new innovative products is high risk and can often take time to develop. This scheme will allow a company or a start-up reinvest in their business as they will be able to retain a greater proportion of their earnings. This is something that can specifically drive innovation in the Irish SME sector.”
The Minister for Jobs, Enterprise and Innovation received Cabinet approval for the introduction of the ‘Knowledge Development Box’ Bill 2016, which is hoped to pass by the end of this year. According to the Department, this will open up the opportunity for companies across a broad spectrum to pay lower taxes on profits from Irish-based research and development activities.
The scheme will also apply to companies in incubation units right through to high-potential start-ups in all industry sectors as long as they generate income coming from R&D. This scheme will be of direct benefit to companies of a relatively lower scale, with global income of less than €50 million.
The Minister adds: “Furthermore, I see this scheme as assisting those companies that wish to scale-up. We have many terrific companies developing innovative products but are sometimes bought out before they develop their full potential. This scheme will assist companies achieve scale. Innovation is at the heart of our economic recovery and growth and when this legislation is enacted we will have in place a Knowledge Development Box to suit the needs of all enterprises, large and small.”
Ireland is the first country in the world to offer an OECD-compliant Knowledge Development Box, offering certainty to global and Irish owned enterprises.
