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Irish Knowledge Development Box Off To A Slow Start

by Jason Gorringe, Tax-News.com, London

01 May 2018


Fewer than 10 companies have claimed tax relief under Ireland's new Knowledge Development Box (KDB), the Finance Minister has said.

Paschal Donohoe was asked to provide parliament with information on the number of companies availing of the KDB and the cost of the scheme.

The KDB regime has been available for companies with accounting periods commencing on or after January 1, 2016. Companies have a maximum of 24 months to make a claim for KDB relief.

Donohoe said that "a small number of companies (less than 10) with accounting periods ended on or before December 31, 2016, have claimed KDB relief." He added that the tax cost of these claims to date is around EUR5m (USD6.1m).

The Government had originally expected the KDB to cost EUR31m in 2016, with the "full year cost" rising to EUR50m.

Donohoe stressed that, "given the large amount of documentation that is necessary, it is anticipated that more companies will make use of the 24-month time frame available."

"As such, more claims in respect of the year ended December 31, 2016, may be made by September 2018."

The KDB covers income that arises from patents, copyrighted software, and, in the case of smaller companies, other intellectual property that is similar to an invention that could be patented. An eligible company can claim a deduction equal to 50 percent of its qualifying profits. This means that, in effect, these profits are taxed at 6.25 percent. Ireland's headline corporate tax rate is 12.5 percent.

TAGS: tax | patents | Ireland | intellectual property | accounting | copyright | corporation tax | transfer pricing | revenue statistics | BEPS

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