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Public Consultation launched on the proposed new Knowledge Development Box incentive

Monday, January 19, 2015

Further to commitments iterated as part of the Budget 2015, the Department of Finance today launched a public consultation on the introduction of the Knowledge Development Box – a new corporation tax incentive which will focus on business assets resulting from investment in “knowledge based capital”.

The incentive will provide for an effective tax rate for income derived from intellectual property below the standard corporation tax rate, creating a tax environment in Ireland conducive for entities to create and develop intellectual property.

Similar type incentives exist in other countries, however the objective of the Department, and the consultation process, is to formulate and design an Irish incentive which will be “best in class and at a low competitive and sustainable tax rate”. A simultaneous objective is also to ensure the incentive remains fully compliant with international standards. In that regard the consultation paper considers in detail draft international rules, currently being finalised by the EU and OECD, on the creation of such tax incentives.

The consultation period commences today and will run for 12 weeks until 8 April 2015, with interested parties being invited to submit views on how the incentive should be designed to ensure it meets key objectives. It is anticipated that the Knowledge Development Box incentive will come into force at some point next year.

We will be closely involved in this consultation process and will be updating clients regularly in advance on matters.