It is proposed to take Questions Nos. 29 and 47 together.
As the reply consists of statistical data, I propose to circulate it with the Official Report.
The following table sets out the information requested in so far as it is available:
|
Year
|
Manufacturing and other corporate profits qualifying for the reduced rate of about 10 per cent.
|
Corporate profits taxed at other rates
|
|
|
£ million
|
|
Taxable profits*(1)
|
1985
|
300
|
|
400
|
|
|
1986
|
330
|
|
470
|
|
|
1987
|
350
|
|
460
|
|
|
Tax paid*
|
1985
|
29
|
|
188
|
.5
|
|
1986
|
32
|
.5
|
225
|
.5
|
|
1987
|
34
|
|
221
|
.7
|
|
Average rate of tax paid²
|
1987
|
Not available
|
Not available
|
|
Allowance or Relief:(3)
|
|
Amount of tax foregone
|
|
|
|
Export sales relief(4)
|
1985-86
|
not relevant
|
422
|
.9
|
|
1986-87
|
not relevant
|
377
|
.8
|
|
1987-88
|
not relevant
|
729
|
.2
|
|
‘Shannon’ relief(4)
|
1985-86
|
not relevant
|
56
|
.8
|
|
1986-87
|
not relevant
|
29
|
.0
|
|
1987-88
|
not relevant
|
116
|
.0
|
|
Manufacturing and other qualifying profits reduced rate of tax*5
|
1985
|
111
|
.3
|
not relevant
|
|
1986
|
123
|
.5
|
not relevant
|
|
1987
|
131
|
.4
|
not relevant
|
|
Capital Allowances*(6)
|
1985-86
|
|
286.5†
|
|
|
|
1986-87
|
|
310 †
|
|
|
|
1987-88
|
|
306 †
|
|
|
|
Reduced rate of corporation tax for small profits*
|
198519861987
|
|
7.6†8.5†9.†
|
|
|
|
‘Section 84’ loans(7)
|
1985
|
|
76.5†
|
|
|
|
1986
|
|
64.3†
|
|
|
|
1987
|
|
94.8†
|
|
|
|
Stock relief*(8)
|
1985
|
|
7.0†
|
|
|
|
1986
|
|
0.4†
|
|
|
|
1987
|
|
—
|
|
|
|
Group relief*(9)
|
1985
|
not available
|
not available
|
|
1986
|
not available
|
not available
|
|
1987
|
not available
|
not available
|
|
Urban renewal(10)
|
1985-86
|
not relevant
|
not relevant
|
|
1986-87
|
not relevant
|
nil
|
|
1987-88
|
not relevant
|
negligible
|
|
Special rate of 35 per cent applicable to certain income and concerns(11)
|
1985
|
not relevant
|
11
|
.2
|
|
1986
|
not relevant
|
13
|
.7
|
|
1987
|
not relevant
|
14
|
.5
|
|
Relief for provision of rented residential accommodation
|
198519861987
|
|
0.3†0.5†0.5†
|
|
|
|
Arrears of tax:
|
|
|
|
|
|
|
Estimate of amount likely to be collected*(2)
|
Year of accountAll years to
|
Position at 31 May 1988
|
|
1985-86
|
|
20†
|
|
|
|
1986-87
|
|
15†
|
|
|
|
1987-88
|
|
90†
|
|
|
*These estimates are very tentative and are subject to a wide margin of error.
†Breakdown not available.
Notes
(1) Taxable profits
Figures for taxable profits, as distinct from commercial profits are shown. An estimate for the latter is not available.
(2) Average rate of tax paid
Presumably the average rate requested is intended to be by reference to commercial profits and not taxable profits as shown in the table. Statistics are not available which would enable an estimate of the amount of commercial profits of companies liable to tax at the 10 per cent rate to be complied.
(3) Allowance or relief
(a) No account is taken of the fact that without some of these incentives many of the enterprises involved might not have been set up in this country. To the extent that the profits earned by such enterprises would not have been available for Irish tax purposes, part of the cost figures shown might be regarded as notional.
(b) Statistics are not recorded in such a manner as would enable the information requested to be provided in relation to other reliefs and incentives, for example:—
—expenditure incurred in mining operations;
—expenditure incurred on acquiring industrial know-how;
—payments to an Irish university or other qualifying educational establishment to enable it to undertake research in, or engage in the teaching of, industrial relations, marketing or any other approved subject;
—expenditure incurred by a trader on scientific research;
—certain expenditure incurred on recruiting and training of local staff;
—expenditure incurred on the acquisition of patent rights and the tax exemption accorded to income arising from the devising of certain patents;
—investment in film making.
Such information either could not be obtained or could not be obtained without undertaking enquiries which could be carried out only at a disproportionate cost.
(4) Export sales relief and ‘Shannon' relief
The figures for each year include the tax relief relevant to accounting periods which ended in that year and to earlier accounting periods insofar as such relief was allowed in that year.
(5) Manufacturing profits
These figures represent the estimated loss to the Exchequer arising from the charging of manufacturing and other qualifying profits at rates of corporation tax of about 10 per cent instead of at normal rates.
(6) Capital allowances
The figures shown relate to the cost of the relief granted to companies and self-employed individuals. The cost included for companies is by reference to accounting periods ending in the year ended 5 April immediately preceding each of the years in question.
(7) ‘Section 84' loans
These figures include preference share financing which is a minor element in the total.
(8) Stock relief
Stock relief was not renewed in 1986 for any sector other than farming. The estimate included in the table for 1986 is a carry-over of the cost of the 1985 renewal.
(9) Group Relief
In the case of accounting periods beginning on or after 1 January 1989 section 34 of the Finance Act, 1988 provides for the restriction of group relief to the extent that losses incurred in an activity qualifying for the 10 per cent rate may be set off only against profits from another activity qualifying for the same rate, instead of the current position whereby such losses may be set off against profits chargeable at the full rate of corporation tax. An annual saving to the Exchequer of at least £1 million can be expected from this measure.
(10) Urban Renewal
Relief from income tax and corporation tax was introduced under Chapter V of the Finance Act, 1986 to promote urban renewal and development in certain areas.
(11) Special 35 per cent rate
This relates to the income of certain public utility companies, the Agricultural Credit Corporation, housing loan interest received by certain banks, the income of building societies and the investment income of the "life funds" of life assurance companies. With effect from 1 April 1989 section 33 of the Finance Act, 1988 provides for the abolition of the special 35 per cent rate in all cases except life assurance companies.
(12) Arrears of Corporation Tax
The bulk of the figures relate to assessments which were still under appeal or in respect of which appeals were, as at 31 May 1988, about to be lodged. These estimates of tax liability to be collected were arrived at on the basis of work in progress and include amounts assessed but not due for payment as at 31 May 1988. By way of example corporation tax due for payment in the latter half of 1988 is included. These estimates are based on Revenue experience but they will require to be revised in the light of recent outturn from the tax amnesty.
