Bernard J. Durkan
Question:111 Mr. Durkan asked the Minister for Finance the extent to which the provisions in the Finance Act, 1999, has met the concerns of the credit unions; and if he will make a statement on the matter. [14085/99]
Written Answers. - Credit Unions.
The 1999 Finance Act did not alter the taxation treatment of credit unions. I have made clear the position in relation to the tax treatment of credit unions savings on a number of occasions. I also set up a working group to examine this matter in conjunction with the Irish League of Credit Unions. Their report was presented to me last October and earlier this year I made the report publicly available.
It is clear from reading that report that this matter is a complex issue and that there are a number of issues to be considered before any decision can be taken. Not least, there is the EU dimension which must be carefully examined. While the EU Commission decided not to regard the corporation tax exemption enjoyed by credit unions as a State aid, one consideration, I believe, which influenced their decision is the fact that the dividends paid out of such income are liable to income tax in the hands of the credit union members themselves. This benign attitude of the commission to the corporation tax exemption could change if we were to exempt dividends from income tax. This is a point which should not be overlooked by those now seeking an exemption of credit union dividends from income tax. As I am sure the Deputy knows I continued the corporation tax exemption in the 1998 Finance Act.
As I indicated recently, in this House, I am still considering the position of credit unions but as yet have no proposals in this regard.