Vol. 510 No. 4
35 Mrs. Owen asked the Minister for Finance the number of Irish registered non-resident companies registered in Ireland in 1999; his views on industry sources claims that a number of such companies are entering into agency contracts whereby the beneficial ownership of their income and assets is transferred to an entity in an offshore jurisdiction and the non-resident company only acts as an agent for the other entity; and if he will make a statement on the matter. [21881/99]
The Finance Act, 1999 introduced a number of measures to deal with the IRNR problem. Subject to exceptions for genuine IRNR company structures involving a trading activity in Ireland and ulti mate share ownership in an EU or a tax treaty country, all companies incorporated in Ireland on or after 11 February 1999 – the date of publication of the Finance Bill – are regarded as being resident in Ireland for tax purposes. IRNR companies which were already incorporated in Ireland before 11 February 1999 became tax resident here from 1 October 1999 – unless again they come within the exceptions referred to. This year's Finance Act also amended the information requirements for newly registered companies, made the penalty regime more effective in relation to certain non-compliance, and enabled the Revenue Commissioners to give notice to the Registrar of Companies where a company fails to provide the required information, so as to allow the Registrar to initiate strike-off proceedings.
The Deputy will be aware that the Companies (Amendment) (No. 2) Bill, 1999, which is currently on Report Stage, contains further measures aimed at discouraging the use of Irish registered companies for activities which have no connection with Ireland. For example, the Bill provides that a company will not be formed and registered unless the registrar is satisfied that the company will carry on an activity in the State. Furthermore, section 43 of the Bill will require every Irish incorporated company to have at least one director who is resident in the State or, alternatively, to provide a bond to the value of £20,000 which must be available to pay certain fines and penalties under the Companies Acts and the Taxes Acts. This requirement will apply to existing companies as and from 12 months from the date of commencement of the section.
The Deputy has asked how many non-resident companies were registered in 1999. Having regard to the exceptions for genuine IRNR structures, a company's tax residence status cannot be definitively identified at the point of incorporation. Accordingly, I am not in a position to provide the Deputy with the precise information requested. However, all companies will now be regarded as resident here unless they establish entitlement to these exceptions.
The total number of companies incorporated in the nine months period up to the end of September 1999 was 13,975 as compared with 17,004 incorporated in the first nine months of 1998. Revenue practice is to write to companies following incorporation to determine their tax status. I am informed by the Revenue Commissioners that they wrote to 8,397 companies incorporated in the period 11 February 1999 to August 1999 and which had not already filed the required particulars. Replies received are currently being examined. Following enactment of the Finance Act, 1999, Revenue also wrote to 38,996 companies which were incorporated prior to 11 February 1999 but which were not carrying on a trade in the State and had not registered for tax. Arrangements will be made by Revenue to notify the Registrar of Companies of those companies which fail to provide the required information so as to enable him to initiate strike-off procedures.
