ICT Ireland, a trade group representing the technology industry, has called on the Government to introduce a 35 per cent tax credit for firms that undertake research and development (R&D) in the Republic.
At the launch of a report entitled R&D: Securing the Future yesterday, ICT Ireland also recommended setting up a new national co-ordinating policy body to develop the State's R&D strategy.
The group said a combination of new fiscal incentives and better management of research activities was required to arrest the Republic's decline in competitiveness.
It said even after accounting for new funding supplied by Science Foundation Ireland and the Higher Education Authority, the Republic spent less than any other European country on research and development.
The Republic spends just 0.35 per cent of gross domestic product on research, compared to 0.95 per cent by Finland and 0.59 per cent in the UK, the report said.
The current low corporation tax regime in the Republic, with its focus on production and exports, acts as a disincentive for research and development in the Republic, according to ICT Ireland.
The industry body recommends a simple volume-based tax credit with a headline rate set at 35 per cent.
Eligible companies would be those that had been approved grant assistance under one of the research schemes operated by the Science Foundation, other State agencies or the European Union.
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