Dáil Éireann Debate, Tuesday - 28 May 2013
156. Deputy Pearse Doherty asked the Minister for Finance the amount that could be raised for the Exchequer if the current withholding exemption on royalties were abolished and a 1% withholding tax were applied to outgoing royalties from Irish companies to foreign holding companies; and if he will make a statement on the matter. [25295/13]
View answer189. Deputy Pearse Doherty asked the Minister for Finance the revenue that would be raised for the Exchequer if withholding tax were applied to dividends paid to treaty countries. [25592/13]
View answerI propose to take Questions Nos. 156 and 189 together.
Both questions relate to the domestic provisions on withholding taxes under the Taxes Consolidation Act 1997. If the Irish tax legislation were amended to provide that a 1% withholding tax would apply to outgoing royalties from Irish companies, or that withholding tax would apply to dividends paid to treaty countries, any changes would be subject to the relevant tax treaty rules on such payments. For example, if a double taxation treaty provided that the rate of withholding tax on royalties was 0% - and this is the case in some 30 (out of 69) of Ireland’s signed treaties - then that zero rate would apply, because treaties have precedence over domestic law.
Similarly, some 22 of Ireland’s double taxation treaties provide for nil withholding taxes on dividends, and approximately 30 more provide for a rate of 5% for companies (subject to an ownership criterion being met) - these are the maximum rates that would apply, regardless of the rate inserted in domestic law.
I am informed by the Revenue Commissioners that the available data on royalties is not sufficiently detailed or precise to ascertain the revenue that could arise to the Exchequer if the changes mentioned in the question were made In relation to the revenue that could be raised for the Exchequer if withholding tax were applied to dividends paid to treaty countries, it is not possible to separately identify from tax records the amount of dividends that are paid to treaty countries and therefore the information requested by the Deputy cannot be ascertained.
