The Irish Government hails it as a world first for Ireland’s tax regime. Finance experts say it is a timely response to a long-coming turn on tax among the world’s most powerful governments. We think it’s a sensible measure which should help to restore confidence in Ireland’s taxation policies and bring specific benefits to home-grown entrepreneurs.
The Knowledge Development Box (KDB) is a special tax rate applied to income generated from research and development (R&D) activities in Ireland. The idea was introduced at Budget 2015, when the controversial ‘Double Irish’ loophole was closed. It was subjected to a public consultation earlier this year, and then formally announced in the recent Budget.
The KDB will provide “a 6.25% rate of corporation tax to apply to the profits arising to certain patents and copyrighted software which are the result of qualifying R&D carried out by the company qualifying for the relief”, the Government says. This is half of the normal corporation tax rate in Ireland.