IBRC Liquidation

Questions (253)

Gerry Adams

Question:

253. Deputy Gerry Adams asked the Minister for Finance if he will confirm whether the sale of Irish Bank Resolution Corporation assets as consideration for redeeming the aggregate principal of National Assets Management Agency bonds means on a net basis the total cost on the Irish State from IBRC could be higher than the €25 billion estimated by the now former chairman of IBRC Alan Dukes in October 2012 if those assets were to be sold at the aggregate principal of NAMA bonds; if he will confirm if the special liquidator will have regard for the capital provisions that were in place prior to the liquidation of IBRC in the disposal of its assets; if he will publicly detail the total nominal independent valuation of the IBRC assets in advance of the asset disposals taking place; if he will detail the gap between the capital provisions for the assets that were in place prior to IBRC’s liquidation and the total nominal value of the assets after independent valuation.; and if he will make a statement on the matter. [8282/13]

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Written answers (Question to Finance)

It is too early in the process to speculate on the potential financial outcome of the liquidation process. However, I can confirm to the Deputy that due consideration was given, in preparatory work on the liquidation of IBRC and the legislation passed earlier this month, to ensuring the best possible outcome for the Irish taxpayer. As part of the role of the liquidators, the assets of IBRC will be valued independently before being sold. Any assets not sold to third parties at or above the valuation price will be sold to NAMA at the independent valuation. This ensures a ‘floor’ price on the assets of IBRC and that where required, assets with limited sale potential can be worked through in the medium term by NAMA rather than sold at any price. The Government’s approach in this area is consistent and focused on the best outcome.

Regarding the valuation process, at this stage of the special liquidation the liquidators are engaged in intensive processes which involve inter alia, asserting control over the businesses, processes, systems and personnel of IBRC. It is important that focus is placed on assessing, reorganising and restructuring the day–to-day activities of the Bank to meet the primary objective of ensuring the purpose of the special liquidation is achieved, as this is key to ensuring that value is extracted from the liquidation.

IBRC Liquidation

Question No. 255 answered with Question No. 240.

Questions (254)

Gerry Adams

Question:

254. Deputy Gerry Adams asked the Minister for Finance if he will provide granular detail on a transactional and cash basis on the way the Bank of Ireland was repaid or is to be repaid for its one year repurchase agreement with the Irish Bank Resolution Corporation that was due to expire in June 2013; if he will confirm further to his public statements on RTE radio on the 8 of February 2013 that the Government bonds which the Central Bank of Ireland has agreed to sell are tranches of the Irish government bond that was owned by IBRC but held by Bank of Ireland; if he will detail after the liquidation of IBRC who became the economic owner of the Irish Government bond issued to IBRC in March of 2012 and held by Bank of Ireland in a repurchase agreement with IBRC; and if he will make a statement on the matter. [8283/13]

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Written answers (Question to Finance)

The repurchase transaction entered into by Bank of Ireland and IBRC was a commercial agreement and had been explained to the Bank’s shareholders in a comprehensive 89 page circular sent to shareholders, with the transaction having been approved by shareholders at an EGM. The State, having been deemed a Related Party to the transaction, under Stock Exchange rules, did not vote its 15% shareholding at that EGM. As part of the transactions relating to the Liquidation of IBRC, the bond repo agreement between IBRC and Bank of Ireland was terminated on a no gain/no loss basis and the Central Bank acquired the bond.

I can confirm that the Irish Government Bonds which the Central Bank has committed to sell include the 2025 Irish Government Bond that was owned by IBRC but held by Bank of Ireland.

This bond will be placed in the trading portfolio of the Central Bank, along with the bonds acquired in exchange for the Promissory Notes. The Central Bank will sell these bonds but only when such a sale is not disruptive to financial stability. The Central Bank have undertaken that minimum of bonds will be sold in accordance with the following schedule: €0.5bn by the end of 2014, €0.5bn per annum from 2015 to 2018, €1bn per annum from 2019 to 2023 and €2bn per annum from 2024 onwards.

Question No. 255 answered with Question No. 240.

IBRC Liquidation

Questions (256)

Gerry Adams

Question:

256. Deputy Gerry Adams asked the Minister for Finance if the National Assets Managment Agency will or has already acquired the Exceptional Liquidity Assistance Master Loan Repurchase Agreement from the Central Bank of Ireland and therefore the loan assets assigned as collateral under the MLRA facility with Irish Bank Resolution Corporation which in June 2012 amounted to €5.9 billion; if he will confirm if NAMA has not acquired the Exceptional Liquidity Assistance Master Loan Repurchase Agreement from the Central Bank of Ireland whether the Central Bank of Ireland is now the owner of these loan assets assigned as collateral; and if he will make a statement on the matter. [8285/13]

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Written answers (Question to Finance)

The Minister for Finance in a Direction issued to NAMA pursuant to Section 13 (1) of the Irish Bank Resolution Corporation Act 2013 on 7th February required it to enter into a Deed of Assignment and Transfer with the Central Bank of Ireland on or about the 22nd February 2013. The intention is that NAMA will execute the Deed of Assignment and Transfer during the week beginning 18th February 2013. However, at the time of the IBRC liquidation the funding agreements in place between IBRC and the Central Bank of Ireland with respect to ELA consisted of the Special Master Loan Repurchase Agreement and the Facility Deed. There was no funding advanced to IBRC under the Master Loan Repurchase Agreement when IBRC was liquidated.

IBRC Liquidation

Questions (257)

Gerry Adams

Question:

257. Deputy Gerry Adams asked the Minister for Finance if he will detail the total amount of ELA debt that was provided to Irish Bank Resolution Corporation as consideration for the Facility Deed with IBRC before its liquidation; if he will confirm that the Anglo Irish Bank Annual Report and Accounts 2010 description of the Facility Deed with the Central Bank of Ireland as an unsecured loan facility guaranteed by him, who separately benefits from a counter indemnity from the bank should the guarantee be called upon is the correct description of this arrangement between the bank and the Central Bank of Ireland up until the liquidation of IBRC; if he will confirm that this Ministerial Guarantee and counter indemnity to honour this guarantee has now been called upon as a result of the IBRC liquidation and NAMA enforcing its security; if he will confirm that the counter indemnity from IBRC to him for the now repayment of National Assets Management Agency bonds issued as consideration for the Facility Deed ELA associated debt is indemnified against all of the assets on IBRC’s balance sheet except those assets which were secured as collateral against the Master Loan Repurchase Agreement and the Special Master Loan Repurchase Agreement between the Central Bank of Ireland and IBRC; and if he will make a statement on the matter. [8286/13]

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Written answers (Question to Finance)

At the time of the IBRC liquidation the funding agreements in place between IBRC and the Central Bank of Ireland with respect to ELA consisted of the Special Master Loan Repurchase Agreement and the Facility Deed. The amount of funding advanced to IBRC at the time of liquidation was c.€40 billion. There was no funding advanced to IBRC under the Master Loan Repurchase Agreement when IBRC was put into liquidation. The description in the 2010 Annual Report with respect to the Facility Deed was correct for the funding arrangements in place at the time. However, a floating charge was granted to the Central Bank of Ireland by IBRC over unencumbered assets in October 2012 and the Facility Deed benefits from this floating charge. Previously, part of the ELA outstanding was secured by loan assets under an MLRA. At the time of the appointment of a Special Liquidator to IBRC, the MLRA collateral had been replaced by lending against the Facility Deed and a floating charge over all of the assets on IBRC’s balance sheet.

Following liquidation, the Central Bank will exchange the obligation owing to it under the Facility Deed and the assets on IBRC’s balance sheet under a floating charge, which includes assets previously collateralised under the MLRA, for NAMA bonds which are guaranteed by the Irish Government.

The Ministerial Guarantee has not been called upon with respect to ELA. The Ministerial Guarantee will transfer to NAMA on its acquisition of the Facility Deed from the Central Bank of Ireland.

IBRC Expenditure

Questions (258)

Gerry Adams

Question:

258. Deputy Gerry Adams asked the Minister for Finance if he will detail the total amount of ELA debt that was provided to the Irish Banking Resolution Corporation for the loan assets assigned as collateral under the Master Loan Repurchase Agreement facility with the Central Bank of Ireland before the IBRC liquidation; and if he will make a statement on the matter. [8287/13]

View answer

Written answers (Question to Finance)

At the time of the IBRC liquidation the funding agreements in place between IBRC and the Central Bank of Ireland with respect to ELA consisted of the Special Master Loan Repurchase Agreement and the Facility Deed.

There was no funding advanced to IBRC under the Master Loan Repurchase Agreement when IBRC was put into liquidation. Previously, part of the ELA outstanding was secured by loan assets under an MLRA. By the time of the appointment of a Special Liquidator to IBRC, the MLRA collateral had been replaced by lending against the Facility Deed and a floating charge over all of the assets on IBRC’s balance sheet.

Departmental Correspondence

Questions (259)

Patrick Nulty

Question:

259. Deputy Patrick Nulty asked the Minister for Finance if he will ensure the publication of all correspondence from the European Central Bank to his Department in relation to the financial crisis; and if he will make a statement on the matter. [8291/13]

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Written answers (Question to Finance)

It is the policy of my Department to publish as much correspondence as possible where the publication of the correspondence is in the public interest and where it is reasonably practicable to do so. However, as the Deputy can appreciate, occasions can arise where it is not possible to publish all the records held by the Department. For example under Section 24(2)(e) of the Freedom of Information Act 1997 as amended by the Freedom of Information Act 2003 my Department cannot release information that has been communicated in confidence from, to or within an institution or body of the European Union. Also under Section 24(2)(f) of the same Act my Department cannot release records of an Institution or Body of the European Union which contains information the disclosure of which is prohibited by the Institution or Body.

Mortgage Debt

Questions (260)

John O'Mahony

Question:

260. Deputy John O'Mahony asked the Minister for Finance if endowment mortgages will be catered for in the Personal Insolvency Bill; and if he will make a statement on the matter. [8297/13]

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Written answers (Question to Finance)

The Deputy will be aware that the Personal Insolvency Act was signed into law by the President on the 26 December 2012. The Personal Insolvency Act amends existing bankruptcy law and also introduces new frameworks for the formal consideration and possible settlement of unsustainable debt situations, including the Personal Insolvency Arrangement which will deal with secured debt, outside of formal bankruptcy. As such a debtor will be in a position to propose a Personal Insolvency Arrangement to address unsustainable mortgage debt, irrespective of the particular type of mortgage. However, strict eligibility criteria will apply before a debtor can make such a proposal to his/her creditors, including that the debtor is regarded as being insolvent. As such, a Personal Insolvency Arrangement will not be a vehicle to solely address a mortgage shortfall arising from the maturity of an endowment policy unless the debtor is overall in a position of insolvency.

Regarding the issue of endowment mortgages more generally, I have been informed by the Central Bank that where the proceeds of an endowment policy are insufficient to repay the capital element of an endowment mortgage, borrowers need ample time to make alternative repayment arrangements. In addition, borrowers are afforded the protections of the ’Code of Conduct on Mortgage Arrears’ in cases where the mortgage is in arrears or in pre-arrears and is secured by the borrower’s primary residence.

The Deputy may wish to note that, when the risks associated with endowment mortgage products were highlighted in the 1990s, specific provisions were incorporated into the Consumer Credit Act 1995 which require warnings to the effect that the proceeds of a policy may not be sufficient to repay a mortgage. Under the provisions of the Act, endowment mortgage savings plans must be reviewed by the life company at least every five years to check if the plan is on track to repay the mortgage. In this regard, a statement setting out the estimated revised valuation of the endowment policy at maturity must be issued by the insurer to the borrower. If the policy is not on track to repay the mortgage, the life company will recommend an increase in the premium.

NAMA Portfolio Value

Questions (261, 262)

Derek Nolan

Question:

261. Deputy Derek Nolan asked the Minister for Finance the number of properties currently under the remit of the National Asset Management Agency in Galway city; and if he will make a statement on the matter. [8340/13]

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Derek Nolan

Question:

262. Deputy Derek Nolan asked the Minister for Finance the strategy or guidelines the National Asset Management Agency has in place to deal with the units currently under its remit in Galway city; and if he will make a statement on the matter. [8341/13]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 261 and 262 together.

NAMA advises that detail on the breakdown, by county, of the value of property securing NAMA’s loans is provided in its Annual Reports and Financial Statements for 2011, which is available on the NAMA website, www.nama.ie.

Properties under the control of receivers or other insolvency professionals appointed by NAMA are listed on its website at http://www.nama.ie/about-our-work/properties-enforced/. The site allows for searches by both property type and country/area. In each instance, information about the firm dealing with the insolvency and its contact details are provided. Potential purchasers are encouraged to contact the receivers to obtain additional information on specific properties and to submit expressions of their interest to purchase.

In the case of property under the control of debtors, NAMA is precluded, under Section 202 of the NAMA Act 2009, from disclosing confidential information. Confidential information is specifically defined to include information relating to debtors. Furthermore, Section 99 of the Act provides that, on acquisition of a loan, NAMA takes over the obligations of the participating institution under the loan, one of which is the contractual duty of confidentiality which the debtor enjoyed while still a customer of the participating institution. Information about individual debtors or guarantors is also protected against disclosure by the Data Protection Acts with which NAMA must comply as a data controller.

However, in cases where NAMA receives enquiries from potential purchasers about specific properties under the control of debtors, it can facilitate contact with a view to enabling sales transactions to take place.

NAMA advises that the strategy for individual properties, including for instance whether a debtor should arrange for early sale of a property or hold it with a view to generating on-going cash flow, is determined on a case-by-case basis. Individual asset strategy is guided by cost-benefit analysis and by the objective of obtaining maximum return for the taxpayer.

IBRC Liquidation

Questions (263)

Mattie McGrath

Question:

263. Deputy Mattie McGrath asked the Minister for Finance the hourly rate and the amount that has been paid to date to the Joint Special Liquidators appointed by him to liquidate the Irish Bank Resolution Corporation, formerly Anglo Irish bank under the provisions of the Irish bank Resolution Corporation Act 2013; the way this hourly rate compares with other countries in the EU; his views on the often exorbitant rates of pay charged by liquidators, examiners and receivers; if he has considered introducing legislation or regulation to ensure that the State is not ripped off by such persons; and if he will make a statement on the matter. [8357/13]

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Written answers (Question to Finance)

I am sure the Deputy will understand that for commercial reasons hourly rates cannot be disclosed. It is obvious that in the circumstances, a tender process could not have been entered into for the liquidation of IBRC due to the sensitivity of the matter. However, I can assure him that the rates that have been agreed are commensurate with those agreed following a tender process undertaken by the National Asset Management Agency. As is normal in liquidations of companies, all costs, charges and expenses properly incurred by the Special Liquidators in relation to the winding up of IBRC, including the Special Liquidators’ fees, will be paid out of the assets of IBRC in priority to all other claims.

The issues of legislation for regulating pay rates does not fall under my remit, however I can assure the Deputy that this Government will always work to ensure that best value is achieved for taxpayers.

National Solidarity Bonds

Questions (264)

Finian McGrath

Question:

264. Deputy Finian McGrath asked the Minister for Finance the reason trade unions cannot put money into national solidarity bonds; and if anything can be done regarding same (details supplied). [8358/13]

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Written answers (Question to Finance)

Trade unions can hold the National Solidarity Bonds subject to the common limits on holdings that apply to all holders. In respect of the 4-year National Solidarity Bond, the limit is €250,000 and in respect of the 10-year National Solidarity Bond the limit is also €250,000, bringing the overall maximum possible holding to €500,000.

Where a trade union wishes to place money in excess of €500,000 with the State, there are other Government savings products available from the National Treasury Management Agency (NTMA).

Job Initiatives

Questions (265)

Peadar Tóibín

Question:

265. Deputy Peadar Tóibín asked the Minister for Finance if he will detail, in tabular form, each of the initiatives announced by his Department to support employment; the date of the first announcement; the date when the initiative went operational; the budget set aside for the initiative; the total draw down to date for the initiative; and the number of net jobs created by the initiative. [8368/13]

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Written answers (Question to Finance)

Rather than announcing initiatives, my Department puts in place measures, via the Budget and Finance Bill process, to support and increase employment, among other policy objectives. As such, the information in tabular form which the Deputy is seeking is not available from my Department. The role of these measures is to encourage and assist employers in their own efforts and to provide them with practical help. Examples of such measures would include VAT.

The Finance (No. 2) Act 2011 provided for a second reduced VAT rate, of 9%, on a temporary basis in respect of certain tourism-related services and goods for the period 1 July 2011 to 31 December 2013. This was announced in the Jobs Initiative on 10 May 2011. In reducing the VAT burden on activities related to the tourism industry, the introduction of the 9% VAT rate is aimed at contributing towards boosting tourism and the creation of additional jobs in that sector. The measure was estimated to cost €120m in 2011, €350 in 2012, €350 in 2013, and €60 in 2014 and nil thereafter.

Reduction in Employer’s PRSI

In the Jobs Initiative, the lower rate of PRSI payable by employers was halved until end-2013. This applied to lower income jobs that pay up to €356 per week.

R&D Tax Credit

The Research and Development (‘R&D’) tax regime allows a tax credit of 25% on incremental R&D expenditure in addition to the normal 12.5% trading deduction. The scheme provides for expenditure on R&D that is in excess of that undertaken in the base year of 2003 to qualify for the credit. The regime has been improved in a number of ways in Finance Act 2012 and further amendments are proposed in Finance Bill 2013.

Special Assignee Relief Programme (‘SARP’)

The SARP was introduced in Finance Act 2012 and is designed to reduce the cost to employers of assigning key individuals in their companies from abroad to take up positions in the Irish based operations of their employer. This relief is targeted at individuals who are highly skilled and whose placement in Ireland could lead to additional employment in new divisions or sections of the company in which they are employed.

Foreign Earnings Deduction (‘FED’)

The FED was introduced in Finance Act 2012 to assist companies seeking to expand into emerging markets. The scheme provides a deduction from income for income tax purposes for work related travel to certain countries. Additional exports from such companies could lead to employment creation.

Employment and Investment Incentive

EII is a tax incentive which provides income tax relief for investment in certain corporate trades. Relief is initially available to an individual at 30%, with a further 11% tax relief available where it has been proven that employment levels have increased at the company at the end of the holding period or that the company spent a certain proportion of the monies raised on Research and Development. An extension of the EII for a further 7 years from 2014-2020 was announced in Budget 2013. In addition, hotels, guesthouses and self catering accommodation where they meet the conditions of the incentive will be allowed qualify on a temporary basis, to be reviewed after a period of two years

3 Year Tax Exemption for Start-up Companies

This scheme provides relief from CT on the trading income and certain gains of new start-up companies in the first 3 years of trading. It was introduced in FA (No.2) 2008 and applied to the extent that the CT liability did not extend beyond €40,000.

It has been amended and extended in Finance Act 2012 and further amendments are proposed in Finance Bill 2013

Taxation of International Financial Services

In order to retain competitiveness, Finance Act 2012 introduced a package of low-cost measures to support the continued success of the International Financial Services industry. The measures focused on improving double tax relief and reducing administrative burden. Finance Bill 2013 also contains a small number of measures to improve the competitiveness of the IFSC and assist in maintaining and growing employment in the sector.

Renewable energy generation

Finance Act 2012 extended the qualifying period for the scheme of tax relief for corporate investment in certain renewable energy projects from 31 December 2011 to 31 December 2014. The purpose of the scheme is to encourage investment in renewable energy projects and to facilitate the growth of electricity generation capacity using these sources. It applies to the following categories of technology: Solar, Wind, Hydro (including ocean, wave or tidal energy), and Biomass.

Energy-efficient equipment

Finance Bill 2012 also extended the scheme of accelerated capital allowances for expenditure by companies on certain energy-efficient equipment for a further 3 years to end-2014.

Cut in commercial Stamp Duty

Finance Bill 2012 abolished multiple Stamp Duty rates for non-residential properties, and brought in a single rate of 2% in respect of instruments executed after 6 December 2011.

Real Estate Investment Trusts

As announced in the Budget, Finance Bill 2013 will provide a new tax regime to allow for the introduction of Real Estate Investment Trust (REIT) companies in Ireland. REITs are an internationally recognised format for collective investment in rental property. It is hoped that REITs will facilitate the attraction of foreign investment capital to the Irish property market, helping to stabilise that market, and also releasing bank financing from the property market for use by other sectors of the economy. REITs also provide investors with an alternative lower-cost, lower-risk method for property investment.

Finance Bill 2013 - Other Corporation Tax measures

In addition, the Finance Bill contained further enhancements to the ‘Key Employee’ provision of the R&D Tax Credit and the Intangible Asset regime.

The Seed Capital Scheme (SCS)

An extension of the SCS for a further 7 years from 2014-2020 was also announced in Budget 2013. This scheme provides that an employee, who leaves employment and invests by means of shares in a qualifying new venture, may claim a refund of income tax paid in previous years. An unemployed person may also avail of this facility.

I would add also that, conscious of the unfair competitive advantage to be gained by those businesses that do not fulfil their tax obligations, a variety of measures have been introduced by me in recent Finance Bills to assist Revenue in counteracting shadow economy activity.

Exchequer Revenue

Questions (266)

Aodhán Ó Ríordáin

Question:

266. Deputy Aodhán Ó Ríordáin asked the Minister for Finance the potential earnings for the Exchequer of the introduction of a 1% income tax increase for all earners over €100,000. [8408/13]

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Written answers (Question to Finance)

It is assumed that the threshold for the proposed new income tax rate mentioned by the Deputy would not alter the existing standard rate band structure applying to single and widowed persons, to lone parents and married couples. On that basis, I am advised by the Revenue Commissioners that the estimated full year yield to the Exchequer, estimated by reference to 2013 incomes, of the introduction of a new 42% income tax rate, would be of the order of €52 million. However, given the current band structures, major issues would need to be resolved as to how in practice such a new rate could be integrated into the current system and how this would affect the relative position of different types of income earners.

This figure is an estimate from the Revenue tax-forecasting model using latest actual data for the year 2010, adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and subject to revision.

European Central Bank

Questions (267)

Patrick Nulty

Question:

267. Deputy Patrick Nulty asked the Minister for Finance if he will confirm whether the European Central Bank ever threatened to end liquidity funding to Irish banks if Anglo-Irish Bank / Irish Bank Resolution Corporation was liquidated by the State in the time previous to the bank deal of the 6/7 February 2013; and if he will make a statement on the matter. [8420/13]

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Written answers (Question to Finance)

As the Deputy is aware, the Government’s approach to the discussions with our European partners has always been constructive and consensual. This approach has been very successful to date, as witnessed in the developments earlier this month, and by meeting our commitments and engaging in constructive dialogue with our European partners we expect further results in the future.

The Central Bank of Ireland (CBI) and ECB provide funding to Irish banks under various arrangements. The funding decisions relating to the other Irish banks made by the CBI and ECB were independent of the situation with regard to IBRC. Funding via exceptional liquidity assistance (ELA) was provided to IBRC by the CBI with the express knowledge of the ECB.

However, from both the CBI and ECB’s viewpoint the use of ELA for long term funding was problematic. ELA is only ever intended to be a temporary funding arrangement and as such the conclusion reached with regard to the Promissory Notes is a very positive outcome.

Tax Code

Questions (268)

Brendan Griffin

Question:

268. Deputy Brendan Griffin asked the Minister for Finance if he is monitoring the success or otherwise of the SMS/MMS levy in Hungary; and if he will make a statement on the matter. [8502/13]

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Written answers (Question to Finance)

As I advised the Deputy in December, the matter of the introduction of an SMS/MMS levy will be kept under review by my Department.

I am aware of the recent introduction of a tax on messages and telephone calls in Hungary, and I understand that this tax is the subject of a formal challenge by the European Commission. Officials of my department are monitoring developments in this regard, and there are no plans at this time to implement such a tax in this jurisdiction.

As previously advised, the wider social and economic considerations which may militate against the introduction of a further tax on text messages would have to be taken into account, not least that mobile phone calls and text messages are already subject to VAT at 23%.

A levy on such messages could significantly increase the overall rate of taxation on mobile phone accounts, given that the average monthly spend per user is of the order of €35, and this would have implications for all sectors of society which would require careful analysis.

European Investment Bank

Questions (269)

Catherine Murphy

Question:

269. Deputy Catherine Murphy asked the Minister for Finance if his Department has input, through the voting of his representative on the board of the European Investment Bank, in influencing the policy changes which inform the investment decisions of that bank; if so, if he will provide details of the process by which his policies in relation to the EIB are achieved; and if he will make a statement on the matter. [8589/13]

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Written answers (Question to Finance)

The European Investment Bank (EIB) was established in 1958, under the Treaty of Rome, as the long-term lending bank of the European Union. The EIB is owned by the EU Member States who subscribe to the Bank's capital. As shareholders, the Member States are represented on the Bank's main independent decision-making bodies, the Board of Governors and the Board of Directors. The overall objective of the Bank is to contribute towards the integration, balanced development and economic and social cohesion of the EU Member States.

The EIB has four statutory bodies; three decision making bodies: the Board of Governors, the Board of Directors and the Management Committee, and one control body: the Audit Committee.

The Board of Governors comprises Ministers designated by each of the 27 Member States, usually Finance Ministers. It lays down credit policy guidelines, approves the annual accounts and balance sheet, and decides on the Bank’s participation in financing operations outside the European Union as well as on capital increases. It also appoints the members of the Board of Directors, the Management Committee and the Audit Committee. I am currently Ireland’s representative on the Board of Governors.

The Board of Directors consists of 28 Directors, with one Director nominated by each Member State and one by the European Commission. There are 18 Alternates, meaning that some of these positions are shared by groupings of States.

The Board of Directors has sole power to take decisions in respect of loans, guarantees and borrowings. As well as seeing that the Bank is properly run, it ensures that the Bank is managed in keeping with the provisions of the Treaty and the Statute and with the general directives laid down by the Governors. Its members are appointed by the Governors for a renewable period of five years following nomination by the Member States and are responsible solely to the Bank. Ireland’s representative on the Board of Directors is currently Dr. Michael Somers.

I assume that the Deputy is referring to Ireland’s representative on the Board of Directors in her question. Decisions are adopted by that body when a majority consisting of at least one third of the members entitled to vote, including the Director nominated by the Commission, and a majority of at least 50% of the subscribed capital have voted in favour of a decision. In specific cases, a qualified majority is required with at least eighteen votes in favour, representing a minimum of 68% of the subscribed capital.

There has been continued close engagement with the EIB since President Werner Hoyer’s visit last July when he met with the Taoiseach as well as the Minister for Public Expenditure and Reform and myself. This visit led to the establishment of a Joint High Level Working Group between my Department and the EIB to enable close collaboration on projects aimed at expanding the Irish economy and supporting growth.

Mother and Baby Homes Inquiries

Question No. 273 answered with Question No. 237.

Questions (270, 271, 272)

Robert Dowds

Question:

270. Deputy Robert Dowds asked the Minister for Finance his plans to revise an agreement with Zambia on avoiding double taxation which dates from 1971, which Action Aid says is implicated in losses to the Zambian Exchequer through transfer pricing. [8614/13]

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Robert Dowds

Question:

271. Deputy Robert Dowds asked the Minister for Finance if multinational companies with offices here are required to disclose international related-party transactions which may give the company a tax advantage; and if not, if he will consider introducing regulations on this issue. [8615/13]

View answer

Robert Dowds

Question:

272. Deputy Robert Dowds asked the Minister for Finance the extent to which Ireland shares information about taxation with developing countries, for example Ireland's long-term development partner countries in order to help developing countries address tax avoidance by multinational companies. [8616/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 270 to 272, inclusive, together.

I am advised by the Revenue Commissioners that in common with all of Ireland’s agreements for the avoidance of double taxation, the Ireland – Zambia Double Taxation Convention contains a provision which allows the tax authorities of the two jurisdictions to consult with each other under what is called the “mutual agreement procedure” when there are any doubts or difficulties in relation to the application or interpretation of the treaty. The relevant provision of the Ireland – Zambia Convention is Article XXI. While the Irish Revenue Commissioners cannot comment in relation to any specific case, they have informed me that the Zambian tax authorities have not expressed any concerns in relation to the application or interpretation of the Convention.

The Ireland - Zambia Convention sets out the “arm’s length principle”, which requires profits arising between connected parties, i.e. which involve the uses of transfer prices, to be computed in the same amount as would arise on foot of transactions between independent parties. This principle has continued to be an unchanging feature of the OECD and UN Model Double Taxation Conventions. It is not apparent, therefore, that there is any basis for linking concerns in relation to transfer pricing with the provisions of this Convention.

Specific transfer pricing legislation was enacted by Finance Act, 2010 and is contained in Part 35A of the Taxes Consolidation Act 1997. These provisions set out the rules that govern the application of the arm's length principle, mentioned above. The arm’s length principle and the related transfer pricing provisions must be applied to adjust any understatement of profit that would otherwise arise, so that the full arm’s length profit is taxed in Ireland. Companies within the scope of the Part 35A provisions must meet documentation requirements and have such documentation available to Revenue to demonstrate compliance with the legislation. The first corporation tax returns to which the legislation applied were for accounting periods ending on 31 December 2011 and these returns were received in September 2012.

In addition to the provisions mentioned above, the provisions of Chapter 3 of Part 33 of the Taxes Consolidation Act 1997 set out requirements to provide the Revenue Commissioners with information in respect of disclosable transactions. These are specified types of transactions one of the main purposes of which would be to provide a tax advantage. As with the tax codes of other countries, where anti-avoidance and disclosure provisions are intended to protect the domestic tax base, the provisions of Part 35A and Chapter 3 of Part 33 are intended to protect the Irish tax base.

Assistance to other countries in addressing suspected avoidance or evasion is provided internationally by exchange of information. All of Ireland’s double taxation agreements – including that with Zambia – contain provisions for the exchange, between the tax authorities, of information necessary to give effect to the agreement and to the domestic tax law of the Contracting States. Ireland has also negotiated over 20 Tax Information Exchange Agreements – implementing the OECD standard on exchange of information - with countries with which we do not have a double taxation agreement.

In addition, Ireland has signed up to the joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters. In response to a call from the G20 in 2009 “to make it easier for developing countries to secure the benefits of the new co-operative tax environment”, a Protocol was developed to amend this Convention to open it up to all countries. Ireland signed the Convention and the Protocol in June 2011. My Department also supports initiatives such as the OECD’s Tax and Development Programme and works with Irish Aid in this regard.

Question No. 273 answered with Question No. 237.

Tax Settlements

Questions (274)

Bernard Durkan

Question:

274. Deputy Bernard J. Durkan asked the Minister for Finance the correct amount of tax liability outstanding in the case of a person (details supplied) in County Kildare; if an investigation will be carried out as to whether bank drafts submitted in 2003 were offset against any tax liability in this person's case; if a payment history will be provided in this instance in respect of payments made off any tax liability; and if he will make a statement on the matter. [8645/13]

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Written answers (Question to Finance)

I am informed by Revenue that the person in question has an outstanding tax liability of €9,047. The person is meeting these liabilities by way of a ‘longer term’ phased payment arrangement since July 2010 and is to date fully compliant with the terms of that arrangement. The arrangement was agreed between the person and solicitors acting for Revenue on foot of an enforcement referral that was issued at that time.

The four bank drafts highlighted in the Parliamentary Question were submitted to Revenue in 2003 and were drawn against the bank account of a company of which the person in question was a director. These payments were offset, as directed, against VAT and PAYE/PRSI liabilities that were outstanding for the company.

Should the person in question require a statement of payments in regard to his tax affairs he should contact Ms Aine Cummins at 061 488446 or aine.cummins@revenue.ie and she will be happy to assist or provide any information that the person might require.

Central Bank of Ireland Investigations

Questions (275)

Michael McGrath

Question:

275. Deputy Michael McGrath asked the Minister for Finance the timetable for commencement and completion of the Central Bank of Ireland examinations of the code of conduct on mortgage arrears, money lending firms, sales incentives in the banking, insurance, investment, and stockbroking sectors and property insurance claims handling; and if he will make a statement on the matter. [8665/13]

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Written answers (Question to Finance)

The Central Bank has advised me that they have commenced their programme of themed reviews and inspections and work is scheduled to continue throughout the year.

The Code of Conduct on Mortgage Arrears review will be carried out in respect of a number of lenders and will involve both on-site visits and desk based analysis of policies and procedures currently in place or under consideration. This work has commenced and will continue throughout February and March. The findings are intended to inform the upcoming review of the Code of Conduct on Mortgage Arrears.

The moneylending theme has been completed and the results of same will be released shortly.

The Bank has further advised me, as the sales incentives theme covers more than one industry sector this will continue throughout 2013. The Property Insurance Claims Handling themes will take place throughout 2013.

I understand from the Bank that in addition to the planned series of inspections, the Bank will also continue to conduct additional reactive inspections on key issues as they arise throughout the year.