741. Deputy Barry Heneghan asked the Tánaiste and Minister for Finance if he will consider introducing enhanced tax incentives for SMEs investing in automation, artificial intelligence, robotics, advanced manufacturing equipment and other productivity-enhancing technologies to improve competitiveness and support long-term economic growth; and if he will make a statement on the matter. [60627/26]

The Deputy will be aware that, as a small open economy, connected to Europe, the US and the wider world, Ireland has been and continues to be committed to a competitive, transparent, and stable corporation tax system. The trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5 per cent, with larger corporate groups potentially in scope of the Pillar Two 15 per cent Minimum Effective Tax Rate.

It is recognised that small businesses are significant drivers of employment and economic activity across the country. In addition to the 12.5 per cent corporation tax rate, the Irish corporation tax system contains a number of broad tax measures designed to support investment and encourage transformations within such businesses that will enable them to be competitive in a dynamic market. Section 486C start-up company relief, the Accelerated Capital Allowances (ACA) scheme for Energy Efficient Equipment (EEE) and the Research and Development (R&D) Tax Credit are some examples of relevant tax measures, and which are not specific to any sector or industry and thus provide valuable support to any company that meets the relevant criteria.

The R&D tax credit provides a 35 per cent credit in respect of expenditure incurred on qualifying R&D activities. Qualifying R&D activities must seek to achieve a scientific or technological advancement and involve the resolution of scientific or technological uncertainty, therefore companies undertaking qualifying R&D activities in A.I., data analytics, digitalisation, and emerging technologies may qualify for the R&D tax credit on those activities. The R&D tax credit has been a cornerstone of our corporation tax policy since its introduction in 2004 providing support for cutting-edge scientific and technological research for over two decades. Over this period the R&D tax credit has evolved, and been enhanced, in response to stakeholder feedback. The continuing evolution of the regime is important in ensuring the R&D supports remain competitive in the current global environment.

The Research and Development Tax Credit and Innovation Compass, which was published in February this year, sets out the medium-term development of the R&D tax credit and areas for future potential policy consideration to enhance the regime over the term of this Government, with the specific direction of travel in each of those areas to be determined as relevant analysis is completed and subject to the annual Budget and Finance Bill processes.

It should be noted that direct expenditure via grants and other forms of assistance, in line with State aid rules, can sometimes be more effective in achieving policy objectives than the granting of tax incentives or provide greater scope for targeting specific sectors or activities. The Deputy will be aware that a range of grant-based supports are also available to businesses through the Department of Enterprise, Tourism and Employment and its agencies.