McCreevy Brings New R&D Tax Credit Into Force

by Jason Gorringe, Tax-News.com, London

14 July 2004

Irish Minister for Finance Charlie McCreevy has signed a Commencement Order bringing into effect the country’s new research and development tax credit.

The new measure, which has an effective date of January 1, 2004, is contained in the Finance Act and makes provision for a 20% tax credit for additional expenditure on R&D that can be set against a company's corporation tax liability.

Noted Mr McCreevy of the new rules: “R&D is the key to a more knowledge-intensive economy aimed at providing a sustainable long-term basis for growth in employment and incomes.”

He continued: “The tax credit for R&D will help to enhance our competitiveness as a location for new internationally mobile research-related investment, and will encourage existing overseas and indigenous firms to add research functions to their operations in Ireland or to increase their level of research activity."

Meanwhile, the Tánaiste and Minister for Enterprise, Trade and Employment Mary Harney, has announced the drafting of Regulations designed to give companies guidance on what activities constitute research and development for the purposes of the tax credit.

"The overall aim of the R&D tax credit is to encourage an increase in the amount of research and development carried out by companies and to make Ireland an attractive destination for foreign companies to commence or increase research and development,” Ms Harney commented.

She added: “Specifically, we are seeking to encourage activities which will contribute to an enhancement of the calibre of research and development in Ireland and create high quality jobs and opportunities for our workforce."

These Regulations will also have an effective date of January 1, 2004.

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