Today’s “state of the art” can be out of date tomorrow. Innovation plays a key role in maintaining SMEs’ competitiveness and the R&D Tax Credit regime offers financial support in this critically important area.
It provides a significant incentive for companies to invest in research and development, and has been a key factor in Ireland’s ongoing success in attracting world-leading research and development by both indigenous and international companies, says Ian Collins, partner and head of innovation incentives at EY Ireland.
“The regime currently supports over 1,600 companies conducting R&D in Ireland annually and the recent increase in the cash benefit from 25 per cent to 30 per cent for qualifying expenditure should further entice more companies to consider Ireland as a research and development location of choice.”
Recent CSO data, however, indicates that the level of SMEs claiming this benefit has not dramatically increased over the years, despite the significant investment benefits available under the regime, says Collins. “Several areas have been cited as barriers to SMEs and smaller organisations’ access to the regime. Firstly, having refunds payable over three years can be a challenge for organisations with a less robust balance sheet. If this refund was returned in one year it would enable SMEs to reinvest into their businesses.
‘A gas emergency would quickly turn into an electricity emergency. It is low-risk, but high-consequence’
How LEO Digital for Business is helping to boost small business competitiveness
‘I have to believe that this situation is not forever’: stress mounts in homeless parents and children living in claustrophobic one-room accommodation
Unlocking the potential of your small business
“Secondly, the level of documentation is the same whether you are a major multinational company or a small business. Simplifying the documentation requirements for SMEs could enable more to access the scheme.”
Finally, a more streamlined process for validating SME claims would also be likely to increase the attractiveness of what remains a world-leading incentive scheme.
No matter the sector or the size of the organisation, if companies want to remain competitive then they must continue to innovate, says Collins. “At the core of this is enhancing an organisation’s technology, digital and data analytics capabilities, and harnessing artificial intelligence (AI) will no doubt be key to this.
“We believe that the next decade will see a fundamental transformation of organisations, business models and value creation all underpinned by AI and those organisations that don’t embrace change will be left behind.”
In combination with technology, however, innovation also rests on an entrepreneurial spirit and a willingness to experiment, as well as having a strong network that you can engage and collaborate with, says Collins.
Ireland has a really strong culture of entrepreneurship and innovation, Collins concludes. “We have supported the EY Entrepreneur of the Year programme for over 27 years now on the island of Ireland, and each year we see an incredible range of entrepreneurs on the programme who are innovating and changing the face of a diverse range of industries – from pharmaceuticals to space technology, agri-foods to sustainability.”
