Majority of Irish businesses say Ireland is innovation friendly

Knowledge Development Box

Survey finds 80% engaged in innovative activity and KDB of interest to majority.

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A survey of Irish businesses by KPMG and RedC published ahead of Budget 2017 has found that the majority (70%) of Irish businesses believe Ireland is innovation friendly with 80% of businesses engaged in innovative activity.

Despite the majority (57%) of Irish businesses not being aware of the recently introduced Knowledge Development Box ("KDB"), the tax relief, which incentivises innovation, is considered attractive by 58% of businesses.

The findings are contained in KPMG's Innovation Monitor report which annually assesses the attitudes of over 200 Irish businesses to innovation in Ireland and reveals that for many companies across Ireland, innovation remains a strategic priority. This year's report had a particular focus on the Knowledge Development Box, introduced in Budget 2016 to provide an attractive tax rate for income generated from commercialising R&D activities and intellectual property.

Commenting on the findings, Damien Flanagan, Director at KPMG said: "At a time when businesses face rapid change and disruption, nurturing innovation has never been more important. While 70% of the businesses who participated in our research consider Ireland to be innovation friendly, only one third believe that there is effective interaction between the various funding regimes, non-finance supports, collaborative opportunities, access to key talent and so on. The most significant influence on their decision to innovate is the availability of funding while access to qualified in-house personnel and the availability of the R&D tax credit is also very important."

Flanagan noted that while the majority of companies surveyed did not know about the KDB's existence prior to this survey, once it had been explained to them, the majority viewed it as attractive. "We know from our research that 60 percent of companies with patents or copyrighted software (the type of assets which qualify for the KDB) intend to or are already generating income from these assets. These are the companies that the KDB is designed for - it would be a shame if they missed out on claiming the KDB because of a lack of awareness," added Flanagan.

Key findings:

  • 80 percent of businesses are engaged in innovative activity in Ireland and/or abroad.
  • 70 percent of businesses believe Ireland is innovation friendly.
  • 66 per cent of businesses believe the availability of qualified in-house personnel is a major Influence on the ability to innovate.
  • 42 percent of businesses have availed of the R&D tax credit, almost half of which have been subject to a Revenue enquiry or audit.
  • 57 percent of businesses are unaware of the Knowledge Development Box
  • 33 per cent believe the Government is doing enough to support and encourage innovation.

In addition, the report highlights areas where businesses believe there is room to improve, including:

  • Funding regime and grants: Companies would like to see more grants and incentives being made available. There is also a need for easier access to funding particularly for entrepreneurs, start-ups and smaller companies.
  • Communication: The need for better communication about incentives and supports for Irish companies was highlighted by many respondents who reported difficulties accessing information, understanding application procedures and obtaining feedback.
  • Talent: The personal tax system was flagged as a barrier to attracting talent from outside of Ireland.
  • R&D tax credit: A number of concerns about the R&D tax credit system were highlighted including the need to simplify the application process and improve feedback.
  • Knowledge Development Box: Of the companies who were aware of the Knowledge Development Box, several suggested that the scheme should be widened and some commented on the need to improve the patents system.

Commenting on the report, Julie Sinnamon, CEO of Enterprise Ireland said: "It is heartening to see from the research conducted that four out of five Irish businesses are engaged in innovative activity in some shape or form. The findings also highlight that a strong appetite exists to strengthen Ireland's innovation ecosystem and the KBD is an attractive incentive, encouraging growth particularly in the area of R&D. Supporting innovation and innovative companies to scale internationally is a key element of Enterprise Ireland's role and we welcome and encourage Irish companies particularly those in early stage to consider the supports on offer through Enterprise Ireland's competitive funding initiatives."


For more information, contact:
Paul Gray
Communications Manager, KPMG Ireland; (01)700 4728

Notes for Editors

About KPMG in Ireland

KPMG in Ireland employs 2,400 people across its audit, tax and advisory services from offices in Dublin, Belfast, Cork and Galway. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services.

About Innovation Monitor

The survey was conducted by RedC Research on behalf of KPMG. The survey was confined to businesses with at least 10 employees and quotas were placed on company size to ensure a nationally representative sample. Interviews were conducted with the Finance Director, Tax Director or a similar individual/partner in the company. Businesses from the following sectors were represented: Medical devices; pharmaceutical, chemical and biotechnology; engineering & mechanical, electrical, industrial products; electronics; agribusiness (food and drink, meat processing); ICT; financial services and renewable energy.

Knowledge Development Box

Knowledge Development Box

In Budget 2016, The Minister for Finance announced the introduction of the Knowledge Development Box (KDB).

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