Large industrial, commercial and agricultural companies which are subject to company tax (or income tax on industrial and commercial profits) have been enthusiastic about the RTC system since its adoption. It is now proposed that the package should be extended to small and medium-sized enterprises (SMEs - as defined by Community regulations) which will benefit from approximately €200 million of additional tax benefits.

Despite the increased RTC rates available in the first two years of the scheme being abolished, the bill extends the scheme to expenditure on innovation beyond initial research. This makes what was already one of the most competitive RTC regimes in Europe even more attractive.

The existing RTC system allows tax deductions for depreciation, personnel-related costs (researchers, etc.), operating costs, costs for outsourced R&D, protection of industrial intellectual property, and costs associated with standardization and keeping up-to-date with technology. In addition to these expenses, amounts that SMEs spend on prototypes, new product development, or pilot plants, will now be covered by the RTC scheme.