Budget 2020: R&D tax credit important stimulus for investment and to sustain job creation
8 October 2019 The amendments to the R&D tax credit regime, which has increased to 30% from 25% for micro and small companies, is an important stimulus for investment and in creating new and sustaining existing employment, according to Deloitte. The revised regime announced by the Minister allows for a number of targeted improvements for micro and small enterprises including an increase in the credit from 25% to 30% of qualifying R&D spending in addition to allowing credit to be calculated based on qualifying pre trading expenditure. In respect of all companies regardless of size, the regime is to be amended to allow qualifying expenditure on up to 15% of costs related to university outsourcing up from the previous cap of 5%.
Commenting on the measure, Caroline O’Driscoll, Tax Partner, Deloitte said:
The amendments to the R&D tax credit regime heralded by the Minister are a welcome step in the right direction in terms of supporting small, indigenous Irish businesses and to allow innovation to prosper within our start-up and scale-up eco-system. The relief is an important stimulus for investment and in creating new and sustaining existing employment. As outlined in public consultations on the R&D credit, companies providing employment data in reviews estimated that their R&D workforce would be just under 50% of today’s levels and their overall workforce would be 37% smaller in the absence of the tax credit. Put simply, the credit works to create jobs.
However, it is worth noting that recent surveys have found that the qualification criteria and requirements with respect to Revenue audits and documentation present a very real barrier to the credit for small and medium sized businesses. It would be helpful if this was addressed to support more businesses avail of the credit.
Against the backdrop of uncertainty post Brexit, it will be vital to ensure that smaller businesses are rewarded for taking risks in developing Ireland’s knowledge economy. Today’s measures are a positive step in this regard. Ireland’s tax credit scheme must continue to develop and maintain its place within the best schemes in the world. The R&D tax credit regime along with its administration, must facilitate companies to benefit and enable them to re-invest in the R&D process to fuel future growth, innovation and prosperity.
For Further Information Please Contact
Tax Partner, Deloitte
01 498 0300
01 417 2356
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