The Minister for Finance has announced that the Knowledge Development Box will be provided for in the Finance Bill. The measure was first signaled in Budget 2015.

He said qualifying income would be subject to a reduced rate of corporation tax of 6.25%, half the regular corporate tax rate of 12.5%.

Minister Noonan said it would be the first OECD-compliant KDB in the world.

He described it as a significant enhancement to the country's corporation tax regime and would help in delivering a keen competitive edge in attracting and retaining quality jobs and investment here.

The "KDB" will offer a tax incentive on earnings originating from research and development projects carried out in Ireland at half the rate of the headline 12.5% corporate tax rate.

Miniser Noonan said this would be the first patent box to comply with the Organisation for Economic Co-operation and Development's new plan to close the tax loopholes of multinationals that cost countries more than $100 billion a year.

Similar patent boxes exist in other countries, most notably in Britain which offers a 10% rate and has been increasingly competing with Ireland for investment from major multinationals.

The Minister also announced that he will provide for the introduction of country-by-country reporting in the Finance Bill to enhance transparency around our international tax obligations.

He said an update to our international tax strategy would be published which would explain the Department's approach to the implementation of the OECD Base Erosion and Profit Shifting reports and how we would engage with the emerging EU tax agenda.

Finance ministers from the G20 countries last week approved the OECD's Base Erosion and Profit Shifting project report which aims to tackle the low tax bills of major corporations.