In the Irish Government Budget for the forthcoming year published on 14 October, it was announced that the so called 'Double Irish' tax mechanism was being phased out. One of the mechanisms that is being considered to replace the 'Double Irish' is a new 'Knowledge Box' scheme. This scheme would be similar to the recently introduced Patent Box in the United Kingdom and would be of significant benefit to intellectual property holders in Ireland and those seeking to establish themselves in Ireland. Commentators suggest the Knowledge Box scheme will include a tax rate likely to be at least as low as 6.25 per cent and perhaps lower on intellectual property assets managed in the scheme. A 6.25 per cent tax rate would be half the standard Irish corporate tax rate of 12.5 per cent. The exact scope and conditions for qualifying for the scheme have yet to be determined.

The rationale behind such a mechanism is that it would offer a major incentive for multinational companies to develop new technology in Ireland and would result in a knock on effect of creating jobs.

It is too early to ascertain the full impact of the introduction of the similar Patent Box scheme in the UK but it is noteworthy that pharma giant GlaxoSmithKline announced it was building a £500 million factory in the UK in the wake of the introduction of that scheme.

However, the potential introduction of the Knowledge Box is to be applauded as it would help cement Ireland's position as a global centre for innovation and will build on Ireland's existing generous tax incentives in the innovation and intellectual property sphere which currently includes a 25% “research and development” tax credit whereby companies can offset a share of any research and development investment costs against any Irish corporation tax they have to pay.