Changes to the research and development tax credit in last year's Budget boosted the amount being invested in innovation, according to a report by the Industry Research & Development Group and KPMG.
Budget 2026 saw the amount companies could claim back for research and development rise, with the R&D tax credit going from 30% to 35%.
In a survey of companies engaged in innovation here, the IRDG found that the majority of companies used this extra benefit to fund existing projects and entirely new activity.
Nearly 40% said it helped to support the hiring of additional staff.
IRDG CEO Dermot Casey said the tax credit was a major driver of activity in the country.
"We're competing with a huge amount of mobile international investment - every country wants the sort of high tech manufacturing that Ireland has," he said. "So having things like the R&D tax credit in place is absolutely key.
"Companies have said that over 50% of the work that they're doing here would move if the R&D tax credit wasn't here and up to 75% would move eventually. So it's hugely important for anchoring business here."
The survey also found that more than half of multinational corporations said that, without the credit, 10% or less of their R&D would take place in Ireland.
However Mr Casey said many Irish firms were also taking advantage of the relief.
"The majority of claimants are actually Irish firms," he said. "1,500 of the 1,800 claimants of the R&D tax credit are Irish firms - SMEs - and it's making a critical difference to a lot of those companies."
Overall, almost 70% of firms said they had increase their R&D spend in the past three years, while 77% expected to increase their investment in the coming years.
And while there are concerns about the impact artificial intelligence will have on science and technology employment here, Mr Casey believes that the relief will continue to be advantageous to Ireland in terms of attracting investment and supporting jobs.
"So a lot of the work we're talking about here... is everything from lab work, design work, developing new products and services," he said. "It's areas that will likely be hugely augmented by AI, but certainly not in the short term being replaced by AI.
"And it anchors a key part of businesses here in Ireland by continuing to invest."
The IRDG has also called for the creation of an Innovation Tax Credit - which would help to cover a broader scope of investment and development projects that companies might undertake.
"The R&D tax credit deals with scientific uncertainty - we're doing an experiment, we don't know if it will work," Mr Casey said. "Things like design and digitisation are areas that aren't covered by the R&D tax credit but they're becoming more and more important.
"We're one of the lowest performers in the EU in terms of design elements, so an innovation tax credit that covered those things that are becoming more important would add another layer to our competitiveness."
