(July 30, 2015)

On January 14, 2015 the Irish Department of Finance opened a public consultation on the intended introduction of the Knowledge Development Box (‘KDB’) (See our article from January 14, 2015). The consultation ran from January 14 to April 8, 2015. On July 30, 2015 the Irish Department of Finance published what it calls a Knowledge Development Box Feedback Statement.

In the introduction of the Feedback Statement the following remark is made: 

“... officials have continued to engage with the OECD’s Forum on Harmful Tax Practices on the internationally agreed parameters that will confirm what acceptable tax competition in this area is, and what may be a compliant KDB regime. The discussions on the ‘modified nexus’ have been on-going at the Forum on Harmful Tax Practices and a consensus on the topic is expected very shortly.

In light of the complexity of the ‘modified nexus’ parameters within which the tax incentive is being designed, the Department is now publishing this paper to respond to the views expressed in the public consultation and to set out possible approaches dealing further with the more detailed considerations that have arisen.”

In the Feedback Statement several issues are discussed, which according to the Irish Department of Finance are important for the overall design of the KDB to ensure that it meets its key objective of being the “most competitive in class”, within the agreed international parameters for fair tax competition in this area.

Some of the subjects discussed in the Feedback Statement are:

·        Qualifying Assets

·        Qualifying Expenditure

·        Qualifying Income

·        Method of Calculation of Profits

·        Calculating the tax due under the KDB

·        Tracking and Tracing

·        Interaction with other provisions

·        Miscellaneous

Next Steps

According to the Feedback Statement the issues addressed in the document will continue to be considered by the Department until the end of August 2015. “This is in order to ensure the timely preparation of legislation for publication in Finance Bill 2015.”

Click here to be forwarded to the “Knowledge Development Box Feedback Statement” as available on the website of the Irish Department of Finance.

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