IMPROVED TAX breaks for companies investing in research are likely to be among proposals brought forward by the Government in the budget.
The goal is to make it easier for companies to undertake research here, according the Conor Lenihan, Minister of State for Science, Technology and Innovation.
Mr Lenihan was speaking yesterday at the Department of Enterprise, Trade and Employment at the launch of a report Delivering the Smart Economy.
The report details progress in advancing objectives in the Government's €8.2 billion strategy for science, technology and innovation.
"It is something that will be dealt with in the budget, yes," Mr Lenihan said yesterday of the possibility of enhanced tax breaks for research.
"I would anticipate there would be an improvement on the tax treatment of R&D in the context of the budget. It is absolutely essential that we improve what we do in this area, and I am optimistic that we can do that both in the context of the budget and budgets that will come after that."
Companies investing in research may currently claim a 25 per cent deduction on costs. This is based on amounts spent above a base year spend made in 2003.
The possibility of further tax breaks for research arose because of a recommendation from the Commission on Taxation, Mr Lenihan said. "The Commission on Taxation made a very specific recommendation that the R&D spend for companies should be offset against their own costs."
It was "a very positive recommendation as to how, for example, the multinationals could treat research on their balance sheets".
He said there was also potential to examine tax deductions related to the high cost of protecting intellectual property. There were significant legal costs associated with pursuing Irish and international patents, with the goal being to make it easier for companies to protect IP.
"It is not just about the tax, it is also about the legal treatment of intellectual property to make things work even better," he said.
"Our ambitions for the budget would be for an enhancement or improvement in the situation in regard the treatment of the R&D credit from a company perspective, but we have also been in discussion obviously with [ the Department of] Finance, and we are encouraged by what we have heard so far."
The "smart economy" report released by Mr Lenihan provides a very accessible overview of how the Government's 10-year investment in research has begun to pay dividends.
"There is an extraordinary amount of spending going on, and obviously, in light of McCarthy, people are saying we do need to show where that money is going and to a large extent how effective that spend has been."
The Government had planned to release the report during the recent Farmleigh global forum, but delayed it, Mr Lenihan said.
The report provides statistics that describe the increased rate of spending, and also provides case studies of companies that have opened specifically because of this investment.
There were "56,000 in employment because of that research and development", he said, and that was a minimum "maintained on a daily basis in employment" in both multinational and indigenous research-driven companies.
"The State spend and the private spend in research and development is actually working, and is in fact the pathway to economic recovery in the years ahead. We have to make it simpler and easier and more transparent, and show that there are demonstrable outputs on how the spend is working."