Dáil Éireann debate -
Tuesday, 14 Dec 1999

Vol. 512 No. 6

Written Answers. - Tax Evasion.

Austin Deasy

Question:

42 Mr. Deasy asked the Minister for Finance the loss to the Exchequer as a result of tax evasion arising from off-shore accounts held by Irish citizens over the past 20 years; and if he will make a statement on the matter. [26916/99]

Minister for Finance (Mr. McCreevy)

I am advised by the Revenue Commissioners that it is not possible to quantify the loss to the Irish Exchequer from tax evasion related to offshore accounts over the past 20 years. Offshore accounts held by Irish citizens for the purposes of tax evasion are very often held in tax haven jurisdictions. A distinguishing feature of tax havens is the active promotion of their secrecy laws, including bank secrecy, which have the effect of facilitating tax evasion and avoidance. Tax havens do not co-operate with other jurisdictions in tax matters and do not exchange information.

Indeed, this problem is not confined to tax havens. Even within the EU, funds placed by non-resident depositors generally are not subject to tax at source in the country of deposit. The interest income would be subject to tax in the depositor's country of residence but, for the most part, information on the interest may not become available to the relevant tax authorities. Deputies will be aware that tax evasion within the EU in respect of interest and other savings income was one of the major issues discussed at the Helsinki summit last weekend.

While information about the scale of the offshore tax evasion problem is not available, such information as has become known to the Revenue Commissioners, for example arising from the Ansbacher and National Irish Bank disclosures, is investigated to the fullest extent possible. No overall statistics are readily available regarding the total of tax recoveries from previous investigations but information about particular categories now under investigation will be made available in due course in an appropriate format. The investigations arising from recent disclosures are complex and, while they are being given priority, will take considerable time to complete. Information about National Irish Bank cases has already been published by the Revenue Commissioners in their annual report for 1998.

Arising from my concerns to improve taxation compliance, I provided for certain measures which were enacted in the Finance Act 1999. These measures considerably strengthen the investigative powers of the Revenue Commissioners in relation to financial institutions and other parties. The new powers include provisions that enable the Revenue Commissioners to audit the DIRT returns of relevant deposit takers, to carry out on-site audits of financial institutions and to allow the Revenue Commissioners to seek from third parties information relevant to the tax liability of a person who is subject to enquiry. In addition, the Revenue Commissioners have been empowered to apply to the courts for orders to seek information from financial institutions or other parties in relation to the tax liability of an individual. The Finance Act, 1999 also considerably strengthened the anti-avoidance provisions in the tax code relating to offshore trusts and companies.