asked the Minister for Finance (a) whether, under Article 25 of the Ireland-UK Double Taxation Convention, any information has been received from the UK authorities in relation to bank deposits of Irish residents in the UK; and, if so, the number and amount of such deposits; (b) whether any arrangements have been made for granting reciprocal information to the UK authorities in relation to bank deposits in Ireland by UK residents; and if he will make a statement on the matter.
Ceisteanna—Questions. Oral Answers. - Double Taxation Convention.
5.
The terms of Article 25 (Exchange of Information) of the Ireland-United Kingdom Double Taxation Convention, 1976, are similar to provisions contained in the Model Double Taxation Convention which were being formulated at that time by the Organisation for Economic Co-operation and Development (OECD) and which were published in 1977. The provisions are also on the same lines as corresponding provisions in other double taxation treaties concluded by Ireland.
Article 25 provides for the exchange of information necessary for the carrying out of the Convention and domestic tax law in each country. In this regard it should be noted that, in general, information is not returned to the Revenue authorities here on bank deposits to which the retention tax applies or in respect of which a declaration of non-resident beneficial ownership has been made. Any information available for exchange under Article 25 is strictly confidential between the Irish and UK Revenue authorities and therefore I cannot reply in detail on that matter. There are no special arrangements for granting reciprocal information to the UK authorities in relation to bank deposits and none are envisaged.
It is a pity that this information is not available to Members of this House. I contend that the provisions of the Finance Act, 1986, taken together with the provisions of the double taxation convention have resulted in the exodus of much finance from this country because the double taxation agreement and the provisions in the Finance Act, 1986, required disclosure of non-residents' accounts.
I have ruled that we cannot have a speech on this.
There was no reply to that question.
It was not a question, it was a statement.
Would the Minister not agree that the foolish provision in the Finance Act, 1986, taken in conjunction with the double taxation convention provisions, has meant that a lot of money has been taken out of this country?
No.
If the Deputy asked a question he grounded it in a speech.
In view of what the Minister has said, that information passed between the Revenue authorities in Ireland and the UK is strictly confidential, would he not acknowledge that that is the main cause of the problem in relation to non-resident accounts here or vice versa? Would he not agree that the apprehension is sufficient to encourage the run on deposits out of this country which has been a feature of the last 12 months, in particular since the DIRT tax was introduced?
The practice in regard to the double taxation agreement has not been changed. There was some misinformed comment upon which I have made statements in order to clarify it and to put it in context, clearly indicating that the practice was not changed in so far as double taxation arrangements for exchange of information is concerned. I do not accept, nor do the experts who have studied matters concerning the outflow of funds, the residual factor in the balance of payments, that the deposit interest retention tax or arrangements of this kind were a significant factor affecting any outflow. They may have had some minimal effect but it was minimal in comparison to other factors which contributed to the temporary outflow of funds.
Does the Minister not agree that while the practice has not changed the law has changed? The application of the practice to new law, namely deposit interest retention tax in particular, has had a very damaging effect and has meant not only a very significant outflow——
The Minister is saying one thing and the Deputy is contradicting him.
——which the financial institutions will confirm at not less than £500 million, but it also means that money that would otherwise be invested in our financial institutions will not find its way here. That at least would amount to the same as the money that went out of the country. The practice may not have changed but the law has and the application of the practice to the law is the big problem.
There has been a change in the law in regard to the powers of the Revenue Commissioners to get information for their own use in order to eliminate the practice of bogus nonresidents' accounts in the hands of people who are resident here but claiming to be resident elsewhere. I am sure that neither the Deputy nor any other Member of this House would condone this activity or criticise anything the Revenue Commissioners might do as being necessary to stamp out the use of bogus accounts as a means of taxing them.
The Minister is concerned about people investing from outside Ireland.
However, in regard to the giving of information to the revenue authorities of other countries in respect of people who are genuinely resident in other countries and therefore subject to tax in other countries, there has been no change in regard to the practice in general or in respect of the particular double taxation agreement referred to by Deputy Joe Walsh, namely the Ireland-UK Double Taxation Convention.
Is the Minister saying that, as far as external depositors in our institutions are concerned, in so far as our Revenue Commissioners now have more information and more powers and because of this confidential exchange between themselves and the UK revenue authorities, they can and do make available information to satisfy the UK authorities? If that is the case is it not quite clear that deposit holders from abroad are being driven out? Those who are contemplating depositing money here will certainly not locate here.
Although the provisions of Article 25 of the double taxation agreement allow for such information to be given, an assurance was given in 1976 by the then Minister for Finance, Deputy Richie Ryan, at the request of the late Deputy George Colley and others as to whether in practice such information would be given, that it would not be transmitted and that remains the case.
I would like to ask the Minister if his attention has been drawn to an article in The Irish Times of 5 November which states that deposits in the Isle of Man have increased from £1.3 billion to £2.75 billion? It would be worth his while to see where that money came from. I suggest that a certain amount of it has come from Ireland, because of the provisions in the 1986 budget in conjunction with the double taxation agreement.
Obviously, I cannot comment on that because the level of deposits and information about them in another jurisdiction are not matters upon which I have any information, nor would I expect to have that information. It is fair to say that it is highly unlikely that a very substantial proportion of that money might have come from this country.
The Minister does not want it here.
As the Deputy is no doubt aware people from a variety of parts of the world go to live in the Isle of Man for tax reasons. It would be entirely unlikely that this money comes from Ireland.
The last place they will come is here.