Noonan's "Innovation" box

CartHorse

In Britain, there's the "patent box". Seems fair enough to incentivise businesses to publish patents and profit from this investment. The EU have raised eyebrows, but they don't dare fuel UKIP's fire and are happy to let this go at least until the next election in 2015.

In budget 2015, Noonan introduced an Irish version of the UK's patent box - the "innovation" box.

Now, this raises some serious questions:
- what is an "innovation"? If you're Bob the Builder and you use eco-concrete instead of standard concrete, is that an "innovation"? How many trees does Bob have to cut down to get the paperwork to have his company "innovation" certified? The whole thing smacks of being yet another tax avoidance scheme for a handful of global corporations who don't want the hassle/bother/risk/cost of having to publish real patents
- how does Westminster feel about Ireland snatching their companies and spring-boarding off their initiatives?
- how does the EU feel about Ireland cute-hooring the system yet again?
- how will voters and ordinary SME shareholders feel about transient global corporations getting huge breaks, getting off on tax, having huge influence over Revenue and having the ear of Government? SMEs have to jump through so many Revenue rules, regulatory hurdles and high costs and many can't survive anymore.

Scofflaw

CartHorse wrote: »

In Britain, there's the "patent box". Seems fair enough to incentivise businesses to publish patents and profit from this investment. The EU have raised eyebrows, but they don't dare fuel UKIP's fire and are happy to let this go at least until the next election in 2015.

In budget 2015, Noonan introduced an Irish version of the UK's patent box - the "innovation" box.

Now, this raises some serious questions:
- what is an "innovation"? If you're Bob the Builder and you use eco-concrete instead of standard concrete, is that an "innovation"? How many trees does Bob have to cut down to get the paperwork to have his company "innovation" certified? The whole thing smacks of being yet another tax avoidance scheme for a handful of global corporations who don't want the hassle/bother/risk/cost of having to publish real patents
- how does Westminster feel about Ireland snatching their companies and spring-boarding off their initiatives?

The concept seems in fact to be either French or Irish in origin, having been introduced originally back in 2000/2001.

- how does the EU feel about Ireland cute-hooring the system yet again?

If it meets our state aid obligations, it should be OK. Other EU countries might bitch about our specific implementation, but given several of them have similar schemes, the issues concerned will be details rather than concept.

- how will voters and ordinary SME shareholders feel about transient global corporations getting huge breaks, getting off on tax, having huge influence over Revenue and having the ear of Government?

Much the same as they have the last few decades?

SMEs have to jump through so many Revenue rules, regulatory hurdles and high costs and many can't survive anymore.

I'm not sure they do, compared to other countries. At least, virtually every "ease of doing business" study has Ireland pretty well ranked - for example: http://www.doingbusiness.org/rankings

The EU have raised eyebrows, but they don't dare fuel UKIP's fire and are happy to let this go at least until the next election in 2015.

I doubt that. They certainly haven't been put off charging the UK the budget adjustment by such considerations, although to be fair that's a process that happens every year, and to all Member States.

The main point of concern about the "patent box" concept is that it should really be about innovation, not simply another corporate tax avoidance scheme. Ireland will probably try, at least, to set it up so that patents created elsewhere but owned by Irish-based companies, can be taxed under this heading, and that will be contrary to the purpose of such a scheme.

Good IT article: http://www.irishtimes.com/business/economy/germany-issues-warning-over-patent-boxes-tax-subsidy-1.1979891

cordially,
Scofflaw

CartHorse

How does Bob the builder or Jonny the haulage company owner avail of the patent box scheme?

Scofflaw

CartHorse wrote: »

How does Bob the builder or Jonny the haulage company owner avail of the patent box scheme?

Usually they don't, just as they don't avail of the R&D tax breaks, because by and large such companies don't do R&D. A small biotech company, engineering firm, software or tech hardware house, on the other hand, could well do so.

But yes, this is primarily aimed at FDI multinationals. I don't think any secret is being made of that, either here or elsewhere.

cordially,
Scofflaw