Dáil Éireann Debate, Tuesday - 17 February 2004
261 Ms Burton asked the Minister for Finance the procedures that are in place to ensure that Irish citizens claiming residency abroad for tax purposes comply with the requirement to be out of Ireland for a minimum of 183 days; if he has satisfied himself that the existing procedures are adequate; if there are plans to review the procedures; and if he will make a statement on the matter. [4830/04]
View answerI am informed by the Revenue Commissioners that they have the entitlement to make all relevant enquiries in relation to any tax return or statement made to them and, where appropriate, to carry out an audit to verify the accuracy of the return or statement. This applies to returns or statements made by persons claiming to be non-resident as it does for all other taxpayers.
Audits and other interventions by the Revenue Commissioners are made on the basis of indications of risk. The status of claims to non-residence is included in risk profiling. I am informed by the Revenue Commissioners that the procedures to be adopted in relation to validating a claim to non-residence in the case of an audit or intervention will depend on the circumstances in each case. The administration of these procedures is a matter for the Revenue Commissioners and I am informed by them that these procedures are kept under review.
262 Mr. Boyle asked the Minister for Finance if his undertaking to introduce amendments in the Finance Act 2002 relating to the tax treatment of the ESOT shareholding following the Valentia takeover of the company was a necessary requirement for the successful completion of the Valentia bid. [5053/04]
View answer263 Mr. Boyle asked the Minister for Finance the basis of his decision to include the amendments to section 13 of the Finance Act 2002 which allowed for existing ESOT to benefit in cases in which a takeover company had insufficient share capital available to do a full ordinary share for share exchange. [5054/04]
View answerI propose to take Questions Nos. 262 and 263 together.
Section 13 of the Finance Act 2002 provides that the transfer and appropriation of securities other than ordinary shares to the beneficiaries of an ESOT or APSS in the circumstances of certain takeovers may take place in a manner which preserves the tax benefits to the participants. The point at which income tax is foregone is when the shares are passed into the ESOT, which in the case of Eircom took place in 1999 and not arising from any amendments contained in section 13.
In June 2001, the tax advisers to the ESOT contacted officials in the Revenue Commissioners and my Department to discuss the tax implications for the Eircom ESOT of the proposed takeover of Eircom. Having considered the issues involved, I indicated in June 2001 that I was prepared to propose an amendment and this I duly did in the Finance Act 2002. This was made known in my response to a Dáil question from the then Deputy and now Senator Derek McDowell on 14 November 2001 on this subject.
Had the change not been made, the ESOT would have had to distribute cash to the beneficiaries as the ESOT would not have been permitted to acquire the preference shares, giving rise to a clawback of some of the income tax foregone in 1999. However, this revenue would only have arisen if the takeover had proceeded.
The legislative changes simply provided the membership of the Eircom ESOT with a level playing field to choose to support whichever bid they wished to support.
In the event, two takeovers were in a position to take immediate advantage of these legislative changes. The first was the takeover of the land-line business of Eircom by the Valentia consortium and the second was the takeover of ACC Bank by Rabobank.
I have made numerous changes to the ESOT legislation to facilitate ESOT's in changing circumstances to ensure that they retain the benefits available to them. This is because, by their nature, ESOTs are tailor-made to each particular circumstance.
