ICT group calls for targeted tax relief to encourage R&D

The Government is believed to be considering the introduction of special tax measures to encourage research and development in industry. However, at this stage it is unclear whether any more will be firmly signalled in next Wednesday's Budget.

The case for "a targeted tax relief" in this area was made yesterday by the Information and Communications Technology (ICT) group of IBEC, which represents the major employment in the tech sector.

Current investment in R&D in the Republic is required, according to Mr Kevin Dillon, chairman of ICT.

He pointed to the recent report from the National Competitiveness Council, which ranked the Republic 12th out of 12 countries examined for the share of the Government Budget allocated to R&D and 11th out of 16 countries surveyed for business spending in this area.

"ICT Ireland is therefore calling for the introduction of a targeted tax relief to encourage industry to engage in research and development," according to Mr Dillon, who is also managing director of Microsoft's European Operations Centre in Ireland.

He said the Government must stick to its commitment to reduce the corporation tax rate to 12.5 per cent on Budget day. It is understood that Mr McCreevy will proceed with this planned reduction, despite calls from some quarters not to do so.

However, he may seek to get extra funding back from the corporate sector through closing off other tax breaks and loopholes and the possible R&D relief is one of the few areas where the Government is examining a new relief.