Innovation Ireland Report Released

by Jason Gorringe, Tax-News.com, London

15 March 2010

The Innovation Taskforce report launched on March 11 by the Irish Prime Minister, Brian Cowen has recommended a range of measures designed to help ensure that the Ireland of the future will be an innovative, high-value and export led economy.

The Taskforce, which includes KPMG tax partner Anna Scally, was established to help position Ireland as an International Innovation Development Hub and to assist in making the smart economy a reality. Its main objective is to advise the government on recommendations to increase innovation and commercialization of R&D in Ireland and ensure that investment translates into high-value jobs and sustainable economic growth.

Speaking at the launch, Anna Scally, tax partner, KPMG said: “The recommendations are all aimed at securing an inflection point that can help Ireland Inc. make a significant step forward. We need to get back to the business of creating jobs. The recommendations in this report are designed to help those who can deliver jobs, entrepreneurs and enterprises. Making it easier for entrepreneurs and enterprises to succeed will be critical to the future of the Irish economy.”

On taxation, the Taskforce makes a range of recommendations, including:

• An urgent call to review the competitiveness of Ireland’s corporate tax regime for highly mobile Intellectual Property (IP) rich enterprises;
• Removal of the incremental base requirement contained in the current Irish R&D Tax credit regime;
• The introduction of a competitive and attractive mobile high-value talent regime;
• A number of technical changes to existing tax provisions, including the introduction of pooling for withholding tax suffered on royalties.

Commenting on the tax recommendations, Scally said: “These tax specific recommendations are designed to significantly improve Ireland’s competitiveness for mobile, high value, IP rich businesses. Making these changes has the potential to catapult Ireland up the international rankings and become the location in Europe in which to develop and exploit IP.”

On entrepreneurship, the report makes the following recommendations:

• Action, as early as possible, on the Innovation Fund in Ireland, to help innovative Irish based enterprises to scale;
• Significantly increase the level of seed capital available to start-up enterprises;
• Introduce a number of tax incentives to encourage entrepreneurs to create jobs, scale companies and recycle investment.

Commenting on these recommendations, Scally said: “Entrepreneurs, in its broadest sense, and enterprise is what is required in order to create sustainable employment. It is essential that we make capital more easily available to our entrepreneurs and we encourage them to grow and scale job creating enterprises.”

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