EMERGING MARKETS:WORKERS WHO spend long periods selling Irish goods and services in emerging markets will get tax exemptions worth up to €35,000 a year under measures proposed in the Finance Bill.
The legislation includes a number of measures that Minister for Finance Michael Noonan claimed yesterday were aimed at creating jobs and aiding Irish companies focused on exporting goods and services.
They include a proposed tax exemption for staff who spend long periods in the so-called Bric countries – Brazil, Russia, India, China – and South Africa selling or promoting goods and services made or provided by their employer.
The provision requires that the worker spends at least 10 consecutive days a year in the countries named in the legislation.
Once they satisfy this requirement the relevant portion of their income will be exempt from tax, up to a maximum of €35,000 a year.
The tax break will not be extended to State agencies, which means that staff in IDA Ireland and Enterprise Ireland, whose primary roles involve promoting the Republic and goods produced here, will not benefit from the exemption.
Mr Noonan said the measure was designed to provide an incentive to people who were selling Irish products in emerging markets.
“We think that a small incentive is appropriate for people who are knocking on doors and trying to sell Irish goods.”
The provision only applies to the countries named, and does not apply to people selling goods in established markets.
The Minister agreed the measure discriminated against the workers selling to established markets, but argued that it was necessary to aid Irish companies in selling goods abroad.
The provision will apply for three years, up to 2014, and will then be reviewed.
The Bill also includes a provision designed to bolster the existing tax breaks for research and development (RD) that are designed to encourage investment in these activities in the Republic by both home and overseas companies.
The legislation attempts to close a number of gaps in the RD regime and give effect to changes proposed in Budget 2012. The budget changes were mainly aimed at small and medium-sized enterprises.
They include allowing all companies to contract out up to 10 per cent of their yearly RD costs, or €100,000, whichever is the larger sum, and still claim the tax credits for the full amount.
Currently outsourcing can amount to 10 per cent of the cost, but that is limited to 5 per cent if the work is sub-contracted to a university.
Mr Noonan said the Finance Bill closes a number of potential gaps that the Revenue Commissioners have identified.
This includes changing the definition of RD activities to rule out situations where the company claiming the tax credits merely manages the activity while it is carried out by others.
The Bill also bars the State from clawing back credits where a company involved in RD is dissolved but the actual work is transferred to another group company operating out of the same building.
It also bars any RD activity that already benefits from EU grant aid from claiming RD tax credits.
The credits are given over a 10-year period to businesses that qualify for the tax break and apply to up to 25 per cent of the total cost involved.
The Bill also includes a measure extending the three-year relief from corporation tax for start-up companies to businesses that begin trading in 2012, 2013 and 2014. This was included in the budget.
