Thursday, 18 April 2013

Questions (83)

Michael Healy-Rae

Question:

83. Deputy Michael Healy-Rae asked the Minister for Finance his views on C2 certificates (details supplied); and if he will make a statement on the matter. [18217/13]

View answer

Written answers (Question to Finance)

I am informed by the Revenue Commissioners that the C2 certificate to which the Deputy refers is no longer in use. The Revenue Commissioners have substantially modernised the operation of the Relevant Contracts Tax (RCT) system following the introduction of a dedicated online facility on 1 January 2012, which offers principal contractors a fast, efficient and paper free system. This has streamlined the process for the submission of information and payments to Revenue and has had the effect of significantly reducing the administrative burden associated with RCT. A feature of the new system is the online notification to principal contractors of the rate of tax to be applied to payments to subcontractors. The system provides for three rates of deduction - zero, 20% and 35%. All subcontractors are issued with a Notification of Determination showing the deduction rate determined by the Revenue Commissioners for the subcontractor. This has removed the need for C2 certificates as the new online notification carries out the same function in a more efficient and streamlined way.

The zero rate is only applied where the Revenue Commissioners are satisfied, among other things, that the subcontractor has complied with all of his income tax, capital gains tax and VAT obligations throughout the previous three years.

A newly registered subcontractor, who has no previous tax history or a subcontractor who has not complied with all of his income tax, capital gains tax and VAT obligations throughout the previous three years but who has complied substantially with those obligations is allocated a deduction rate of 20%, compared to 35% under the old RCT system. The rate of deduction is reviewed periodically and if the subcontractor meets the necessary conditions the deduction rate is adjusted to zero.

In tandem with the introduction of the new system, the Department of Finance has revised the procedures for tax clearance in respect of public service contracts. In the case of all public sector contracts of a value of €10,000 or more, the contractor will be required either to produce a current tax clearance certificate or demonstrate a satisfactory level of tax compliance. A subcontractor who is subject to the 20% rate is regarded as having a satisfactory level of tax compliance and can use the Notification of Determination to demonstrate this.

Accordingly there is no intention or need to introduce a temporary C2 certificate.