Dáil Éireann Debate, Tuesday - 16 October 2012
166. Deputy John Lyons asked the Minister for Finance the date on which the outcome of the public consultation on tax residence will be made known; if the recommendations of this review will be made in time to form part of Budget 2013 to ensure that tax exiles make a fair contribution to the Exchequer; and if he will make a statement on the matter. [44163/12]
View answer167. Deputy John Lyons asked the Minister for Finance the number of submissions received in relation to the recent public consultation on tax residence rules; and if he will make a statement on the matter. [44164/12]
View answer168. Deputy John Lyons asked the Minister for Finance his views on whether a test based on a persons centre of vital interests should be used when determining their tax residence; and if he will make a statement on the matter. [44165/12]
View answerI propose to take Questions Nos. 166 to 168, inclusive, together.
The Programme for Government update in March 2012 confirmed the commitment to undertake a consultation process on residence issues in 2012 to inform preparation for possible further changes in 2013. I launched the public consultation on tax residence rules in May this year, wherein I invited interested parties to make submissions on possible revisions to the current residence rules for the taxation of individuals.
This consultation process has now concluded. A total of eight submissions have been received and these will be published in due course, as indicated when the consultation was announced. My officials are considering the submissions and will be advising me on possible further changes as part of the preparations for Budget 2013.
The Programme for Government indicated that, as part of its fiscal policy, the Government will ensure that “tax exiles” make a fair contribution to the Exchequer. In Budget 2012 I abolished the “citizenship condition” for payment of the Domicile Levy to ensure that individuals could not avoid the levy by renouncing their citizenship. I also stated that I intend to keep the contentious issue of the tax treatment of “tax exiles” (which is linked to the tax residence rules) under constant review.
While the application of the rules in particular circumstances is being considered, the taxation of individuals in the State is broadly in line with the system prevailing in most other OECD jurisdictions, that is to say —
(a) individuals who are resident in the State for tax purposes are taxable here on their worldwide income; and
(b) individuals who are not resident for tax purposes pay tax here only on income arising in the State and on income derived from working here.
The OECD model tax convention describes a ‘Centre of Vital Interest’ test as one of the criteria used to resolve the problem of dual residence of individuals. It refers to the place where the taxpayer's personal and economic relationships are closer. It is one of the criteria used as a “tie breaker” in Double Taxation Agreements to determine in which state an individual is resident. Specific mention was also made in the consultation document to its use as an additional criterion on other jurisdictions.
The application of the residence rules and all related matters are under consideration in the run up to Budget 2013.
