Dáil Éireann debate -
Tuesday, 8 Apr 2003

Vol. 564 No. 5

Written Answers - Tax Code.

Eamon Ryan

Question:

132 Mr. Eamon Ryan asked the Minister for Finance if he will agree to the removal of excise duties from new bio-fuel sources produced within the State pending the introduction of carbon tax; his views on whether the removal of this excise duty would be fair compensation for the conversion costs that are incurred in the environmentally beneficial process; his further views on whether the revenue implications for the State would be minimal but the long-term benefits of encouraging the development of indigenous fuel supplies would be significant, in view of the very limited likely supply of new bio-fuels within the State; and his further views on the fact that without the removal of excise duties on new bio-fuels produced within the State it is unlikely that any such fuels will become commercially viable. [9597/03]

Minister for Finance (Mr. McCreevy)

The matter of bio-fuel production falls within the remit of the Department of Transport. The Department of Transport has informed my Department that Sustainable Energy Ireland has commissioned a paper from Teagasc on the current position regarding liquid bio-fuels in Ireland. The paper, due shortly, will lay out strategic options for the sector. The Department of Transport will review the paper in the context of implementing the forthcoming EU directive on the promotion of the use of bio-fuels. It intends to develop a strategy that takes account of the different interests involved. Pending the outcome of this process, it would be premature and inappropriate to speculate on the issue of the removal of excise duties from bio-fuels and on the other related questions raised by the Deputy.

Eamon Ryan

Question:

133 Mr. Eamon Ryan asked the Minister for Finance his views on the statement of the Institute of Taxation on the need for the establishment of a national committee to examine the need for changes in the transfer pricing rules that allow foreign companies to route profits through Irish subsidiaries in order to avail of low corporate tax rates. [8170/03]

Minister for Finance (Mr. McCreevy)

Transfer pricing rules provide in general that transactions between connected companies must be priced at arm's length prices. Transfer pricing rules have existed for activities in the IFSC and for manufacturing companies for a number of years. In order to qualify for the 10% rate, IFSC companies must furnish a certificate from their auditors stating that their dealings are at arm's length. Manufacturing companies availing of the 10% rate must comply with legislation which requires generally that sales between connected parties must be priced on an arm's length basis. This provides for an appropriate amount of profits being taxable in Ireland.

Transfer pricing rules do not allow foreign companies route profits through Irish subsidiaries in order to avail of low corporate tax rates as stated by the Deputy. Transfer pricing rules of any country are designed to ensure that taxable profits in that country are not understated. Transfer pricing is a complex area and any modernisation would need to be considered carefully. My officials have met the Institution of Taxation to discuss the issue. I assure the Deputy that, if I consider changes to be needed in this area, I will arrange for consultations with relevant experts on any proposals.