Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

As part of his Budget 2023 speech, my predecessor Minister Donohoe announced that he had instructed officials to explore opportunities to support the unscripted sector. This process is currently being undertaken within the Department. However, while this process is on-going, it is, as stated, an exploration of options and it should not be taken as an indication that a tax credit or alternative form of support for the unscripted sector will be introduced. My officials will present the outcomes of this analysis to me for consideration when complete.

The Deputy may be aware that there is an audio-visual tax credit in place in the form of the Section 481 film tax credit. This credit does not however cover unscripted works. Section 481 is an approved State aid, it is approved by the Commission on the basis of 107(3)(D) of the TFEU, aid for a cultural and heritage product.

Section 481 provides relief in the form of a corporation tax credit related to the cost of production of certain films. The scheme is intended to act as a stimulus to the creation of an indigenous film industry in the State, creating quality employment opportunities and supporting the expression of the Irish culture.

Finance Bill 2022 provided for the extension of Section 481 from its current end date of 31 December 2024 to 31 December 2028. This extension is subject to European Commission approval. Extension of the relief in advance of this date demonstrates this Government’s commitment to the Irish audio-visual industry, and is intended to provide certainty regarding the future availability of the relief. This certainty will foster further confidence in Ireland as a centre of excellence for screen production.

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 212 and 213 together.

The Research and Development (R&D) Tax Credit is an important feature of the Irish Corporation Tax (CT) system. The primary policy objective is to increase business R&D in Ireland, as R&D can contribute to higher innovation and productivity. More broadly, the tax credit forms part of Ireland’s corporation tax offering aimed at attracting FDI and building an innovation-driven domestic enterprise sector. The credit enables Ireland to remain competitive in attracting quality employment and investment in R&D.

The Pillar Two minimum effective tax rate will have an impact on the net benefit to large MNCs of the R&D tax credit. Pillar Two will result in a net reduction in the value of the tax credit for claimant companies that are in scope of the 15% minimum tax. This is because the credit value will be treated as income and therefore becomes subject to the minimum tax.

It has been proposed that consideration be given to increasing the rate of the R&D tax credit, so that affected companies obtain the same net benefit from the R&D tax credit after introduction of the Pillar Two rules.

For claimant companies outside the scope of Pillar Two rules, any increase in the R&D tax credit would be a net increase in benefit as they would not be subject to the 15% top-up tax. It would therefore have an Exchequer cost.

It is intended that this matter will be considered further in advance of Budget 2024.