Budget 2016 – Revealed: Government to introduce new lower corporation tax rate for companies that spend more on innovation

THE Government will introduce a new lower corporation tax rate in today’s budget in a bid to increase R&D investment and innovation.

It is understood the new lower rate will only apply if a company agrees to a certain level of investment in research and development as part of the Government plans for its knowledge box scheme.

Budget 2016: Click here for full in-depth coverage of Budget 2016 on Independent.ie

Read more: Live and comprehensive coverage of Budget Day: ‘Squeezed Middle’ to get €1k

The move comes against the backdrop of our already controversial 12.5pc corporation tax rate which is one of the lowest in Europe and will not be changing.

The new lower knowledge-box tax rate will apply only to specific spend on investment that relates to intellectual property, patents and copyright which is expected to be set at about 6pc.

Read more: Budget 2016: Do you know what the knowledge box is?

The Government will set out the criteria necessary to qualify for this lower rate today.

It is understood the knowledge box plan is the only OECD-compliant one in the world

Today’s move also comes against the backdrop of the issue of tax avoidance by multinationals which has become in international issue.

Read more: Budget 2016: ‘Rent certainty’ package in doubt amid row between Noonan and Kelly

Meanwhile, key highlight of Finance Minister Michael Noonan’s Budget speech later today will be a pledge to abolish USC by 2021.