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Dáil Éireann debate -
Tuesday, 15 Nov 2016

Vol. 929 No. 1

Companies (Accounting) Bill 2016: Second Stage (Resumed)

Question again proposed: "That the Bill be now read a Second Time."

This is a complicated and detailed Bill and I want to be correct in what I say. We will also table an amendment on this section as we do not believe it is in the public interest. Indeed we should be moving to a situation where we have legislation requiring more or fuller disclosures, not fewer. Sinn Féin does, however, welcome the introduction of a new category in the legislation, the micro company. This is defined as a company which does not exceed any two of the following criteria: an annual turnover of €700,000 or less, a balance sheet total of €350,000 or less and an average number of ten or fewer employees. This is especially significant as the majority of companies in Ireland would come below this threshold. The Revenue Commissioners would have a far lower threshold for the categorisation of micro businesses. In this regard and in the context of reducing the administrative burden for micro businesses, as part of their simplified processes the Revenue Commissioners allow micro companies to pay their VAT, PAYE and PRSI liabilities on a less frequent basis.

Sinn Féin would also like the Revenue Commissioners to extend similar arrangements to micro businesses for corporation tax and income tax so that they do not have to pay a large tax bill in one lump sum. Furthermore, it would be useful to allow businesses to pay tax on account during the year. This would be of particular use for micro businesses in the service sector with seasonal cashflow.

As well as easing the administration of the tax system for micro businesses, Sinn Féin would have increased the self-employed tax credit to €1,300 in 2017 to help small business people and move then to full equalisation with the PAYE credit. I was quite disappointed that the Government increased the self-employed tax credit to only €950 for 2017.

Moving back to the Bill, we also welcome the closing of the loophole regarding companies that are registered in Ireland as unlimited but have established ownership structures offshore with the effect that the ultimate liability of the owners is limited. Such companies will, under the proposed legislation, now be required to submit a financial statement with their annual returns.

Finally, as noted earlier, we welcome chapter 10 of the Accounting Directive requiring companies involved in the extractive industries and in the logging of primary forests, whether in or outside of the EU, to now make reports on payments to governments. Sinn Féin welcomes this long overdue legislation. However, we do have certain concerns about aspects of the Bill and we will be tabling amendments on Committee Stage.

The Labour Party will support this Bill which brings some benefits, particularly to small and medium-sized enterprises, SMEs, many of which have been aired in the debate, especially the reporting mechanisms for small companies. This is long overdue and will be welcomed by many people working in those industries. Simplifying the reporting mechanisms will help SMEs throughout the country.

It is a serious problem for me that we are dealing with this legislation in the middle of November. It is incredible. It is further evidence of a do-nothing Government in a do-nothing Dáil. This directive was adopted at EU level in June 2013. It is a good directive which, bar a few minor tweaks, should go through the House easily and will be welcomed. Ireland was required to transpose it into national law by 20 July 2015 but of course that deadline was missed. We were one of only two countries, along with Cyprus, not to implement the directive by its due date. In September 2015 the Minister for Jobs, Enterprise and Innovation was sent a letter of formal notice by the Commission, yet according to all the documentation made available, which I have seen, nothing was done. In May when Deputy Mitchell O'Connor was appointed Minister for Jobs, Enterprise and Innovation, the Department gave us all access to a detailed briefing document. On page 15 of that brief, in big bold print was the heading "immediate priorities" and the first item on the list was the Companies (Accounting) Bill 2016, yet six months later the Bill is only starting its passage through the Dáil. In his reply, the Minister of State at the Department of Jobs, Enterprise and Innovation might explain why it has taken so long to bring forward legislation which the Members of this House will support, apart from minor tweaks probably relating to reporting procedures. Some of my issues about bringing forward the timelines and so on were addressed in the Minister's opening statement. Why did it take this long?

If it takes six months to bring forward this legislation, which is marked immediate priority, how long will it take to bring forward other legislation that is going to become a priority in the coming months?

God knows. As already stated, this is a pretty simple piece of legislation that has to be transposed.

To make matters worse, in June the Commission had to issue a reasoned opinion against Ireland on the matter because the Department did not action the transposition of the directive. I recall the issues we have had in this House over a period and under various Governments in the context of transposing European directives. I have seen it from both sides of the fence. When I was an MEP, I saw it when I was fighting to get directives transposed. In my time as a Minister, I also witnessed what is required to transpose a European law and the time and planning involved. It is important that Departments plan in advance. Efforts must always be made to ensure that laws are transposed within the prescribed period. Historically, Ireland had a very poor record in transposing EU law. However, such were the efforts of the previous Government, of which the Minister of State and I were both members, that we reached a point in 2013 at which there was not a single case initiated against Ireland by the Commission at the European Court of Justice for failure to implement EU law. Last year, there was only one case, yet this Department and its Minister, through simple inertia, were trying to put Ireland back before the European Court of Justice.

I am delighted that this Bill is coming through the Houses now. In his reply, I ask the Minister of State to explain why it has taken so long to make something pretty simple happen. It is not a once-off failure by the Department. A document published by his Department in August shows that there are not one or two but eight other EU directives that have not been transposed into Irish law by the Department of Jobs, Enterprise and Innovation. My simple observation is this. I support the Bill, though I have some minor amendments that I will put forward on Committee Stage. In fairness, many of the issues that I had were dealt with in the opening statement earlier, particularly around timelines. However, I have some questions. Why did it take so long for this to be transposed? What is going on in the Department and with the senior Minister in the context of transposing European law into Irish law? Is there a problem or an issue in respect of which this House needs to be notified? I ask the Minister of State to outline the position

On behalf of the two Ministers responsible for the Department, of which I am not one, the Minister, Deputy Mitchell O'Connor, and the Minister of State, Deputy Breen, I thank Deputies for their valuable contributions to the debate on the Companies (Accounting) Bill. I missed the early part of the debate but I know there is much support for the Bill. The importance of it is well recognised. It is vital that we bring it into force as quickly as possible.

Sorry, I cannot keep up with the junior ministerial positions.

I particularly welcome the general expressions of support for the overall objective of the Bill, as well as many of its key features, such as simplification and transparency. It is of course true that small and micro Irish companies have been waiting to apply the benefits of this Bill. Once it is enacted, those companies will find their financial reporting requirements more straightforward and will notice savings in time and effort. That can only be a good thing. I hope we can bring this Bill through the House efficiently and I know there is support for that from Members. That said, efficiency should not come at the cost of a proper consideration of the issues. It is clear from the contributions of Deputies on Second Stage that we can expect good and hopefully constructive engagement on Committee Stage.

While Deputies may see scope for some changes or room for manoeuvre, in some areas that may be limited as this Bill is transposing the EU accounting directive. By the same token, we are amending the Companies Act 2014. That is underpinned by some important policy objectives that should be kept in mind. I was involved in bringing that Companies Act, which was quite a large item of legislation compared to the current one, through committee. This Bill is much more straightforward. The Companies Act was large and I would not recommend us going through that again page by page. In any event, all proposals for amendments will be considered with an open mind. As the Minister of State, Deputy Breen, noted earlier, the Bill seeks to strike a balance between reducing the financial reporting obligations of small and very small companies, on one hand, and ensuring that there is meaningful information for third parties, on the other. It is only right that the legislators address that balance.

On the timing of the Bill, the Government acknowledges that there has been a long delay in bringing it forward. We are going to try to bring it through the Houses as quickly as we can in the months ahead. We agree that its timely implementation is very important.

The Bill contains very technical aspects and the preparation took time as a result. I know from my time spent in the Department of Jobs, Enterprise and Innovation that while a Bill like this might seem straightforward and simple, it can actually be quite complicated and it is important that it is gotten right. As Deputy Kelly knows from his time as a Minister, it can be very difficult to find space when it comes to the people drafting legislation. That can take a bit of time but I am glad that the legislation is now on the floor of the Dáil. I am glad that it is being debated. In recognition that it is a complicated Bill, section 4 will allow for some retrospective effects in order that companies can apply the benefits to financial reports for a period before the legislation comes into force. We are especially conscious of the time of year. It is important that we do as I have outlined.

Deputy Kelly asked about timelines for eight other directives. I remembered them in the past but I do not have the timelines with me. I will get them for the Deputy and forward them to him. Hopefully, with the way the Dáil is up and running now, things will move a lot more rapidly and we will get through legislation much quicker.

I thank Deputies for their time and ask them to support the Bill as a priority. I look forward to their continual engagement on this practical and important piece of legislation.

Question put and agreed to.