Urgent action needed on out of control R&D tax credit – Pearse Doherty TD
Sinn Féin Finance Spokesperson Pearse Doherty TD has said that urgent action is needed after an FOI revealed that the Research and Development tax credit utilised by companies is currently out of control, increasing drastically from €224 million in 2010 to €708 million in 2015, while the number of claimants are decreasing.
Deputy Doherty said;
“The R&D tax credit serves a useful purpose. Its aim is to stimulate the use of research and development activity across the State, which is welcome. However, the credit is currently out of control, increasing sharply over the space of five years, while the number of companies in receipt of the credit is decreasing, going from 1,576 in 2013 to 1,534 in 2015.
“Ten companies are currently claiming two-thirds, €460 million, worth of this credit. In terms of helping smaller companies develop and grow, it is clearly failing in this regard.
“This raises significant questions around the accessibility and suitability of such opportunities for our smaller companies that could utilise such funding to develop and grow.
“Concerns have been raised within the Department of Finance that companies are inflating the amount of R&D they are doing when claiming the credit, it is clear that urgent action needs to be taken to protect the Exchequer from this out of control tax credit.
“According to the Department of Finance, within the €708 million cost of the credit, there is €283 million of this would have happened regardless of the credit.
“Minister Donohoe needs to step up to the mark with this year’s Finance Bill to restructure the credit, ensuring that the it is targeted at areas most in need of with special priority given to smaller companies undertaking actual R&D.
“Companies found to be exploiting the credit must be rooted out and limits for claim amounts (as recommended by the Department of Finance) need to be introduced. This would reduce the overall cost of the credit down, while ensuring smaller companies still get fair access.