Research and Development Tax Credit

R&D Tax Credit 2004

The R & D Tax Credit regulations Taxes Consolidation Act 1997 (Prescribed Research and Development Activities) Regulations 2004 were promulgated by the Department in June 2004, on foot of the Finance Act 2004, Section 33 (6) (a), (PDF file) and provide for the introduction of an incremental tax credit for companies undertaking research and development activities. The overall aim of the provision is to encourage an increase in the amount of research and development carried out by companies in Ireland and to make Ireland an attractive destination for foreign companies to commence or increase research and development, thereby allowing Ireland's industry to capture the higher elements of research and development.

The 20 per cent tax credit against corporation tax for qualifying research and development expenditure is of significant importance to Irish companies. The measure will provide an effective incentive to firms to increase R&D and will complement the various direct R&D grant supports which are also available through various agencies of the State. Guidelines further clarifying the provisions of the legislation have been published by the Revenue Commissioners.

The Department, in conjunction with the Revenue Commissioners, Department of Finance and other stakeholders, is monitoring the take-up of the tax credit with a view to maximise the effectiveness of the provision for increased high level R&D.

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