The R&D tax credit allowing research expenditure to be set against a company's corporate tax liability has come into effect today.
The Minister for Finance signed the order, which provides a 20 per cent tax credit for additional research expenditure and is retrospective to January 1st, 2004.
The Tánaiste and Minister for Enterprise, Ms Harney, has announced guidelines of what constitutes R&D activities for the purposes of the tax credit.
Mr McCreevy said the tax credit will help to enhance Ireland's competitiveness as a location for new R&D investment and will encourage local firms to increase their research budgets.
Ms Harney added the push to attract R&D is designed to move Irish industry up the so-called knowledge chain, something highlighted in the report of the Enterprise Strategy Group published yesterday.
Research in social sciences, market research, or changes of a cosmetic or stylistic nature to existing products are not considered research and development for the purposes of the Finance Act.
Guidelines further clarifying the provisions of the legislation will be published shortly by the Revenue Commissioners following consultation with stakeholders.