This draft report deals with taxation. It is rather terrifying at first sight because it seems to indicate that all the taxation authorities in Europe are going to combine in one massive onslaught on the unfortunate taxpaying community, but it is not quite so.
Measures to Combat Tax Evasion.
What is that described as?
Proposals relating to mutual assistance in the field of direct taxation, repayment and remission of import or export duties, and customs debt.
Sections 1 and 2 agreed to.
On page 3 we set out our views fairly concisely in relation to the mutual assistance proposal. We say that:
The Joint Committee would have thought that the exchange of information between revenue authorities was, as far as Ireland is concerned, already adequately covered by existing bilateral conventions between Member States. However, it has no objection in principle to the proposed Directive but it would like to see the arrangements envisaged tightened up in the following respects :—
When the experts from the Revenue Commissioners came to see us they succeeded in allaying any fears we might have on widespread multinational investigation of taxpayers' affairs.
We set out four points on pages 3 and 4. There are four different types of headings. The first is Exchange on Request, the second is Automatic Exchange, the third is Spontaneous Exchange and the fourth is Double Taxation. Heading C, Spontaneous Exchange, is of most interest to us. The basis of this is to ensure that artificial transfers of profits are not engaged in between one country and another. We would have an interest in that, because if commercial organisations from other countries set up here, and wish to carry on certain activities here which are profitable, we would not like to have the Directive preventing such an operation. We suggest that that type of case should not be treated as requiring automatic exchange of information.
Another point in this draft Directive is the categories to which the automatic exchange of information could be extended by the competent authorities, which in effect would be a committee of officials. We are not too enamoured with that proposal. We say that the determination of categories of cases in which information may be automatically exchanged is strictly a legislative function and should not be left entirely to the competent authority in each Member State. The draft Directive should set the limits within which they should operate. Members of the Committee will generally agree with that. If these categories are to be extended—we do not object to them being extended as occasion requires—we do not wish that to be solely the function of the committee of officials.
Does the rebate system on double taxation operate to our advantage or to our disadvantage?
In theory every double taxation agreement with any country should operate fairly between the two countries. There should be no advantage one way or another.
In theory; but is that so in practice?
It depends on the tax in a particular case. For example, there often is a great deal of hesitancy about completing certain double taxation agreements where there is capital taxation. This hesitancy will remain until we are able to see whether we benefit or lose from our entering into the proposed agreements, or rely on unilateral relief procedure as in most of our Finance Bills. It depends, therefore, on the particular case.
In theory it should be to the advantage of the individual and to the disadvantage of the State.
Deputy Thornley's question is whether in practical operation our Revenue gains or loses. I suppose the answer is that we just do not know.
The answer is that Revenue just do not know in relation to new taxes.
Yes. Whatever the position is, the new capital taxes certainly create an entirely new situation. I do not think anybody, as yet, is fully conversant with all the implications.
Sections 3 to 8 inclusive, agreed to.
Draft Report agreed to.
Ordered: To report accordingly.