S.L. 325.6 Art. 33Research and development credits.

(1) A company which has been determined by the

Corporation as having satisfied the conditions set out in regulation

31(1) and in this regulation shall be entitled to a research and development tax credit which shall be equal to a percentage of the eligible expenditure incurred by such company on or after 1st

January 1995 up to 31st December 2006 and for this purpose the eligible expenditure incurred up to 31st December 2001 shall be multiplied by 1.07n (1.07 to the power of "n") where "n" is a number arrived at by deducting from 2002 the year in which the expenditure was incurred:

Provided that the eligible expenditure shall be that which is incurred under a programme approved by the company by the 31st December 2002 and notified to the Corporation by such date as it shall determine.

(2) The percentage referred to in sub-regulation (1) shall be:

(a) 75% where the expenditure has been incurred on fundamental research activities;

(b) 60% where the expenditure has been incurred on industrial research activities;

(c) 35% where the expenditure has been incurred on development activities;

(d) 75% where the expenditure has been incurred on studies preparatory to industrial research activities;

(e) 60% where the expenditure has been incurred on studies preparatory to development activities.

(3) In this regulation:

(a) "fundamental research activities" means an activity or activities designed to broaden scientific and technical knowledge not linked to industrial or commercial objectives;

(b) "industrial research activities" means an activity or activities consisting of critical investigation aimed at the acquisition of knowledge with the objective that such knowledge may be useful in developing new products, processes or services or in bringing about a significant improvement in existing products, processes or services;

(c) "development activities" means an activity or activities consisting of the shaping of the results of industrial research into a plan, arrangement or design for new, altered or improved products, processes or services, whether they are intended to be sold or used -including the creation of initial prototypes which could not be us ed commercially and the conceptual formulation and design of products, processes or services and initial demonstration projects or pilot projects provided that such products cannot be converted or used for industrial applications or commercial exploitation - but excluding the routine or periodic changes made to products, production lines, manufacturing processes, existing services and other operations in progress even if such changes may represent improvements.

(4) The eligible expenditure shall consist of:

(a) personnel expenses comprising all emoluments paid for services rendered by researchers, technicians and other employees attributable to such employees’ time spent on the research activity and including the employer’s share of social security contributions attributable to such emoluments;

(b) the costs of instruments, plant and machinery and land and buildings used solely for the research activity;

(c) the cost of renting instruments, plant and machinery and land and buildings for the period of time used for the research activity;

(d) the cost of consultancy and equivalent services used exclusively for the research activity, including the research, technical knowledge and patents bought from outside sources;

(e) additional overheads incurred directly as a result of the research activity;

(f) other expenses, including costs of materials, supplies and similar products, incurred directly as a result of the research activity.