Ireland sets up innovation taskforce to create global innovation hub

This will build on the government’s Framework for Sustainable Economic Renewal, set out in December 2008.

An International Monetary Fund assessment published last week said Ireland faces a deeper recession than any other advanced economy. “The lesson from severe global recessions in the past is that as well as weathering the economic storm, countries need to restructure their economies to target the next wave of economic growth,” Cowen said as he announced the taskforce.

Over 40 per cent of foreign direct investment in Ireland is in R&D. The taskforce will advise on ways to increase innovation and entrepreneurship and to ensure that investment in science, technology and research translates into high-value jobs and sustainable economic growth. It will also support the development of the Innovation Alliance between Trinity College Dublin and University College Dublin. The work of the taskforce will be complemented by a Green Enterprise Taskforce.

There was one optimistic sign for the future of the Irish economy in a recent report by Pricewaterhouse Coopers, which found that recent changes in taxation have made Ireland a prime location for the establishment of global venture capital and Research & Development operations.

“The changes have particular significance for global venture capital companies as the Irish Government has now introduced highly attractive tax incentives for carried interest,” said Regina Breheny, director general of the Irish Venture Capital Association, commenting on the report.

Carried interest refers to the share of the proceeds a VC realises from the sale of an investee firm. It is treated as a capital gain, rather than income, and is now taxed at a lower rate of 15 per cent for individuals holding interest through a partnership, or 12.5 per cent for companies.

“Taken together with the Irish Government’s commitment to the 12.5 per cent corporate tax rate, plus its incentives in the area of intellectual property and R&D, these additional taxation measures have positioned Ireland to the forefront of countries for IP development and management,” the report says.