Finance Minister Mr Brian Lenihan earlier this month published the Finance Bill 2010 which gives effect to the taxation measures announced in last December’s Budget. The existing R&D Tax Credit regime has been amended to cover situations where a company carries out R&D activities in different facilities in separate geographical locations and the activities in one of these facilities is permanently discontinued.
The Finance Bill introduces a concession for the calculation of the base year in the situation where a company closes down, or ceases to carry on a trade in, one of its “R&D Centres”. This will be available for accounting periods commencing on or after 1 January 2010.
While the changes are not as predicted and will not dramatically enhance the attractiveness of the R&D Tax Credit to SME’s and Large companies operating in Ireland, R&D Finance experts, Leyton commend the Minister for Finance for not imposing any new measures which could be perceived as being anti commercial to the many companies who are engaged in R&D activities in Ireland.
However, at a time when the Irish government and in particular the department of finance are under extreme fiscal duress to react to the ever reducing tax take from all taxation heads, perhaps this was a missed opportunity to take this legislation to the next level.
Mark Byrne, Business Consultant at Leyton commented, “Existing legislation in this area is good but at a time when very many of our clients are focused on simply staying in business and meeting payroll obligations each week and month, today’s Finance Bill could and should have provided much needed Government support to reinforce the belief that the government is serious about rewarding these innovative and industry leading companies for choosing to locate in the Irish state.”
Emma Fidgeon-Kavanagh, Financial Expert at Leyton: “The Government appears to have acknowledged the impact of the combined effects of the economic climate and the credit’s incremental basis on the benefits provided by the current R&D tax credit system. But this legislative change will in the main only effect companies operating within a corporate group structure, there were many ways that the credit could have been enhanced to benefit a wider spectrum of innovative companies, for example, PRSI set off, or enhancing the payable tax credit.”
Such continued public support by Minister Lenihan and the Government is going to be vital in ensuring that we as a nation do not “leak” existing Irish located high value employment to jurisdictions offering highly competitive bespoke Research & Development legislative solutions.
Leyton is a leading consultancy firm specialised in cost optimisation, including Research and Development (R&D) Finance and Telecommunications expenditure. Our mission is to maximise the financial performance of our clients by helping them drive down the cost of the telecoms spend, and/or helping them optimise their R&D Tax Credit claims and grants.
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