Main R&D incentive “is too complicated” for SMEs – accountants

Paperwork for a key research and development (R&D) incentive is too complicated for small and medium-sized enterprises, the government has been told.

Last month, the umbrella organization of accounting firms, CCAB-I, conducted a survey of practice and industry members with professional experience who claim the R&D tax credit.

“One of the key findings of our survey is the call for simplified documentation requirements for SMEs as part of a broader simplification of the rules for SMEs. In particular, the CCAB-I considers that the requirements set by the tax office, both in terms of scientific value and documentation, are not appropriate for SMEs.”

The submission was made in response to the public consultation on the Research and Development Tax Credit and Knowledge Development Box.

The simplification of the documentation requirements for SMEs is repeatedly cited by accountants as an obstacle to claiming the R&D tax credit.

“In contrast to many larger companies, SMEs and start-ups in particular often lack the financial means to seek professional advice in order to create the documents required by the tax office.”

The incentive is also important for global companies based here.

“Foreign direct investment (FDI) is an important engine of growth in Ireland and the R&D tax credit is an important tool to attract investment from global capital,” said CCAB-I in its submission to the Treasury.

New US tax rules mean changes are needed to keep Ireland’s R&D tax credit competitive, the bill says.

“As a result of these changes, US investors are demanding that the Irish R&D tax credit be made fully recoverable. While such a change would result in a cash flow adjustment for the Treasury, it should not result in an additional cost to the Treasury.

“Certified Accountants have indicated that US investors may no longer be primarily looking to Ireland from 2022 if current rules for repaying the repayable loan remain in place. This would have a negative impact on Ireland’s economy.” Main R&D incentive “is too complicated” for SMEs – accountants

Fry Electronics Team

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