Some chinks of light for technology industry in Budget 2012 – Deloitte
Improvements to the R&D tax credits regime and the introduction of two schemes targeted at key employees (Special Assignee Relief Programme and Foreign Earnings Deduction) announced today will further enhance Ireland’s standing as a location for choice for global technology companies, in addition to supporting innovation in companies here both in the multinational and indigenous sectors.
The improvements will see the first €100,000 of R&D expenditure allowed on a volume basis for the purposes of the R&D Tax Credit and the existing outsourcing arrangements will be enhanced. Companies will also have the option of using a portion of the R&D credit to reward key employees.
The Foreign Earnings Deduction will apply where an individual spends 60 days a year developing markets for Ireland including Brazil, Russia, India, and China. Both schemes are intended as further steps to ensuring that Ireland can compete with other jurisdictions with regards to the taxation of key employees, whether based in Ireland or abroad.
Commenting on the measures, Joan O’Connor, Tax Partner and Head of Technology, Media and Telecommunications at Deloitte commented:
“Ireland has made excellent progress in positioning itself as a technology hub for indigenous and multinational companies. With the improvements to R&D, the Minister has provided support for indigenous SME technology companies operating here. R&D is the lifeblood of technology companies and the indigenous technology sector is vital to job creation, and it is positive that the Minister has recognised this”.
“Equally, competition for attracting multinational technology companies is tough. By introducing targeted employee incentive schemes, Ireland is now a more attractive location for key employees and talent in this area. The knock on effect of these measures on job creation is not to be underestimated.
We are all aware of the critical role that exports will play in Ireland’s recovery. And in this regard, the technology sector is of significant importance to the Irish economy, as a substantial part of this export growth is expected to be generated by technology companies based both in Ireland, from the multinational sector, and indeed our strong indigenous base. Anything that can be done to further position Ireland as a location of choice is to be welcomed, and along with a firm commitment to our 12.5% corporate tax rate, creates further selling points for Ireland Inc.””
For full analysis of the taxation measures announced in Budget 2012 today please visit www.deloitte.com/ie/budget 2012.
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