Minister for Finance, Paschal Donohoe TD, answered Parliamentary Questions from Deputy Marian Harkin TD in the Dáil in late May on delays to the implementation of Finance Act 2019 provisions on the Key Employee Engagement Programme (KEEP) and the enhancements to the R&D tax credit for micro and small companies. Chartered Accountants Ireland has also asked the Department of Finance when these important measures for the SME sector will be implemented.

R&D micro company enhancements

Section 25 of Finance Act 2019 inserted section 766C TCA 1997. This introduced provisions for enhancements to the R&D tax credit for micro and small companies, including an increase in the rate of credit and an enhanced method of calculating the payable credit subject to a Commencement Order pending State aid approval from the European Commission.

The Minister confirmed in his response that the Department of Finance had commenced the proceedings to seek State aid approvals for these provisions last year and internal discussions on the matter are ongoing. The Minister detailed that progress had been slowed due to the pandemic.

The Minister said that the issues relating to the commencement of these R&D provisions will continue to be examined by the Department of Finance in conjunction with other Government Departments and stakeholders in due course.

KEEP

Section 11 of Finance Act 2019 amendments to Section 128F TCA 1997 are subject to commencement by Ministerial Order. These amendments provide for companies who operate through a group structure to qualify for KEEP; to allow for part-time/flexible working hours and movement by qualifying employees within group structures; and, to allow for pre-existing shares to qualify for KEEP.

The Minister confirmed that the Department of Finance is hopeful that matters relating to State aid approval for these provisions will be resolved soon, enabling him to make the relevant order.