Technology Ireland welcomes changes to the R&D tax credit and Employment Investment Incentive Scheme
Technology Ireland, the Ibec group that represents the technology sector, made six key recommendations to Government in its pre-Budget submission and today reacts to the measures announced in the budget relating to (1) National Digital investment, (2) investing in skills, (3) responding to global tax changes, (4) supports for SMEs and entrepreneurs, (5) empowering Ireland to lead on digital policy and (6) digital procurement. The Irish tech sector, as noted in TI 2023 Budget submission, faced challenges but continues to grow at a steadier rate. As technology drives global economic shifts, it's vital for Ireland's government to prioritise the National Digital Strategy's objectives.
Una Fitzpatrick, Director, Technology Ireland said, ‘While two new funds have been announced, (Future Ireland Fund and the Infrastructure, Climate and Nature Fund) we are disappointed to see digital only mentioned once in the Budget 2024 speech and we are disappointed not to see a dedicated National Digital Agenda Accelerator Fund which would serve to accelerate and increase investment in the National Digital Strategy.
Ms. Fitzpatrick also notes the importance of resourcing Ireland’s talent pipeline by investing in skills and education to ensure Ireland remains an attractive and states that ‘while we are disappointed that the National Training Fund (NTF), which could be used to advanced new skills digital skills, could not be unlocked in this Budget. However we welcome the intention set out to find ways, including possible legislative changes to unlock the fund.
On the third Technology Ireland key priority regarding responding to changes in global tax regimes Ms. Fitzpatrick said ‘The increased R&D tax credit from 25% to 30% will be significant to Ireland’s competitiveness to attract and retain high-value research, development, and innovation. Large multinational enterprises (MNEs) will retain the benefits of the credit as we move toward a new Global Minimum Tax and SMEs will benefit by the first-year payment threshold being doubled from €25,000 to €50,000 to provide valuable cash-flow support to companies engaged in smaller R&D projects.
On supports for SMEs and entrepreneurs Ms Fitzpatrick stated, ‘We are pleased to see a new capital gains tax relief for angel investors has been announced, which will allow these investors to benefit from a reduced rate of Capital Gains Tax when they dispose of a qualifying investment and that the amount an investor can claim relief on for four-year investments under the Employment Investment Incentive Scheme has doubled to €500,000. Technology Ireland called for a continuation of entrepreneurs’ relief with improved scheme limits and that it should be extended to passive investors such as Angel or Venture Capital investors’.
The fifth major Technology Ireland focus area in its pre-budget submission was to empower Ireland to lead on digital policy at EU level by developing strong, coherent regulatory capacities at home. Ms Fitzpatrick stated ‘It is positive to see the allocation of €3 million for the Digital Services Coordinator to support enforcement of the Digital Services Act and an additional €1.1 million for the Data Protection Commission. Ireland’s position as the EU headquarters of many multinational technology organisations means that the eyes of Europe are on us as a regulatory partner.
Technology Ireland also highlighted in its pre Budget submission the need to ensure that national cybersecurity capacities, institutions and infrastructure are adequately coordinated, resourced, focused and implemented and Ms. Fitzpatrick states ‘It is positive to see the €10.7 million investment in the National Cyber Security Centre (NCSC) planned for 2024.
Finally, with regard to digital procurement Ms. Fitzpatrick notes ‘Technology Ireland awaits the detail of the new Infrastructure, Nature and Climate Fund, as it is hoped there will be a focus on developing Ireland’s digital infrastructure within it. Government has made previous commitments in Harnessing Digital: Digital Ireland Framework, and Connecting Government 2030, the new public sector ICT strategy. Swift and accelerated delivery of these strategies is required to ensure the economy continues to grow and the case for further private sector investment remains strong’.
Ms. Fitzpatrick concludes her remarks by stating ‘Ireland remains the heart of the technology industry in Europe, but we cannot be complacent and must continue to focus on increasing our attractiveness and outpace our competitors. Ireland must rise to infrastructure challenges, inflation pressures and address our global competitiveness, while paving the way to future growth, creating diverse talent pipelines, prioritising an ecosystem that embraces innovation and invests in skills and supporting entrepreneurship’.