Pearse Doherty
Question:180. Deputy Pearse Doherty asked the Minister for Finance further to Parliamentary Questions Nos. 174, 175, 176 and 190 of 28 May 2013, the case law to which he is referring. [27081/13]
View answerTax Residency Issues
Questions (180)
Written answers
In my reply to Parliamentary Questions Nos. 174, 175, 176 and 190 of 28th May 2013, I referred to the long-standing case law regarding the residence of companies. As a general rule, I indicated that, based on such case law, companies are resident in Ireland for tax purposes if they are managed and controlled here. Our tax legislation does not define what constitutes management and control of a company for the purposes of determining a company’s residence. It is determined based on fact and case law precedent. The long-standing cases in which the principles covering management and control that have been developed by the courts include
De Beers Consolidated Mines Ltd v Howe 5TC198
American Thread Co v Joyce 6TC163
Todd v Egyptian Delta Land & Investment Co Ltd 14 TC 119
De Beers Consolidated Mines v Howe 5 TC 198 is a leading case on company residence. The principle that emerged in that case was that a company’s residence is where the central management and control actually abides.
The Irish Courts, in the case of WJ Tipping (Inspector of Taxes) v Louis Jeancard 11ITR 68, cited and confirmed the principles established in the cases referred to above.
Other cases in which the principles governing company residence were developed include
Bullock v Unit Construction Co Ltd 38 TC 712
Union Corporation Ltd v IRC 34 TC 269
Wood v Holden CA [2006]
Based on the decided cases, factors to be taken into account in establishing where the company’s central management and control lie include, where the important questions of company policy are determined, where the majority of directors reside, where the negotiation of major contracts is undertaken and where the company’s head office is located.
In summary, case law provides us with guidance on the principles underlying company residence and where the central management and control of the company actually abides is particularly significant. Where that central management and control is exercised is a question of fact. All relevant factors, taken together, have to be taken into account in determining the residence of a company.
Question No. 181 answered with Question No. 179.
Tax Reliefs Application
Questions (182)
Maureen O'Sullivan
Question:182. Deputy Maureen O'Sullivan asked the Minister for Finance the amount the Revenue Commissioners paid in 848(a) tax claims to each individual charity in the years 2009, 2010, 2012 and to date in 2013; if he will provide an explanation on the way the Revenue Commissioners assess claims made by charities including the percentage rejection rate of claims for each charity; if he will provide the number of meetings held between the Revenue Commissioners and the Irish Charities Tax Reform Group; and if he will make a statement on the matter. [27428/13]
View answerWritten answers
Section 848A of the Taxes Consolidation Act 1997 provides a scheme for tax relief on donations to eligible charities and other approved bodies. A list of the bodies that qualify for the scheme is available on Revenue's website: www.revenue.ie at the following link: http://www.revenue.ie/en/business/authorised-charities-resident.html.
In relation to donations made prior to 1/1/2013 the precise arrangements for allowing tax relief on donations varied depending on whether the donor, was a PAYE taxpayer only, a chargeable person subject to self-assessment or a company. For a PAYE only donor, the relief was given on a “grossed up” basis to the eligible charity or approved body, as the case may be, rather than by way of a separate claim to tax relief by the donor. In the case of a self-assessed donor, that individual claimed the relief and there was no grossing up arrangement. In the case of a company, a deduction was claimed for a donation as if it were a trading expense. The Finance Act 2013 has introduced a number of amendments to the scheme, which are effective from 1 Jan 2013, including the alignment of treatment for PAYE and Self Assessed donors, the introduction of a 31% blended rate and the capping of eligible donations at €1m.
In regard to the Deputy’s request for details on the amount of money paid to each Charity under Section 848A and the percentage rejection rate for each Charity, Revenue has advised me that its obligation to observe confidentiality precludes it from disclosing such information. However, Revenue has provided details in the table of the total amounts refunded under the scheme to approved bodies during 2009, 2010, 2011, 2012. Accurate data for 2013 will not be available until the end of the year.
|
Year |
Amount refunded |
|
2009 |
€31.5m |
|
2010 |
€30.2m |
|
2011 |
€26.3m |
|
2012 |
€25.0m |
In regard to the assessment of claims made by Charities, such claims are individually checked to ensure they fulfil the conditions of the scheme as listed below:
- That the donation is not less than €250 for the specific year;
- That the donation is in the form of cash and/or designated securities and does not give any benefit to the donor;
- That the Charity is claiming the relief on contributions made by PAYE-only individuals;
- That the claim does not include donations from individuals who are either fully or partially on self-assessment;
- That if the donor is an employee or member of the Charity, tax relief on the contribution is restricted to 10% of the total income of the individual for the relevant year of assessment;
- That sufficient tax was paid by the donor to cover the tax relief allowed to the Charity.
Finally, officials from the Revenue Commissioners attend regular meetings with the Irish Charities Tax Reform Group to discuss a range of issues. Specifically, 7 meetings took place between both parties during the design period of the simplification of the Charitable Donations Scheme which was announced in the 2013 Finance Act and which came into effect from 1 Jan 2013.
EU Directives
Questions (183)
Andrew Doyle
Question:183. Deputy Andrew Doyle asked the Minister for Finance the work his Department is currently undertaking on various pieces of upcoming legislation, through a potential Bill to go through the Houses of the Oireachtas or through Statutory Instrument, to ensure Ireland is in compliance with the upcoming deadlines of Directives from the European Union; the deadline in each case; and if he will make a statement on the matter. [27474/13]
View answerWritten answers
There are seven Directives awaiting transposition into domestic law by my Department at the current time, none of which are past their transposition deadlines. Directive 2009/138/EC has a transposition deadline of 30 June 2013. However, this Directive is the subject of an amending proposal on which negotiations are on-going. As the amending proposal has not been completed, it will not be possible to meet the 30 June 2013 deadline. The EU Commission has indicated that it will not take any action against Member States for not transposing this Directive on time because of the particular circumstances of this dossier.
In relation to Directives 2011/61/EU and 2011/89/EU, my Department is working with the Office of the Attorney General on the drafting of transposing instruments in order to meet the transposition deadline of 22 July 2013. Directive 2013/13/EU is necessitated by the upcoming accession of Croatia to the European Union and is of a purely technical nature; all necessary measures will be in place by the 1 July 2013 deadline.
The following table summarises the position for each of the seven Directives.
|
Directive Reference Number |
Title of Directive |
Transposition deadline |
|
2008/8/EC |
Council Directive 2008/8/EC of 12 February 2008 amending Directive 2006/112/EC as regards the place of supply of services |
1 January 2015 |
|
2009/138/EC |
Directive 2009/138/EC of the European Parliament and of the Council of 25 November 2009 on the taking-up and pursuit of the business of Insurance and Reinsurance (Solvency II) |
30 June 2013 |
|
2011/61/EU |
Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010 |
22 July 2013 |
|
2011/85/EU |
Council Directive 2011/85/EU of 8 November 2011 on requirements for budgetary frameworks of the Member States |
31 December 2013 |
|
2011/89/EU |
Directive 2011/89/EU of the European Parliament and of the Council of 16 November 2011 amending Directives 98/78/EC, 2002/87/EC, 2006/48/EC and 2009/138/EC as regards the supplementary supervision of financial entities in a financial conglomerate |
22 July 2013 |
|
2013/13/EU |
Council Directive 2013/13/EU of 13 May 2013 adapting certain directives in the field of taxation, by reason of the accession of the Republic of Croatia |
1 July 2013 |
|
2013/14/EU |
Directive 2013/14/EU of the European Parliament and of the Council of 21 May 2013 amending Directive 2003/41/EC on the activities and supervision of institutions for occupational retirement provision, Directive 2009/65/EC on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) and Directive 2011/61/EU on Alternative Investment Funds Managers in respect of over-reliance on credit ratings |
21 December 2014 |
Tax Yield
Questions (184)
Thomas P. Broughan
Question:184. Deputy Thomas P. Broughan asked the Minister for Finance the amount of revenue that would be generated in each case if a third rate of tax of 48%, 49% or 50% was applied to persons earning over €100,000 in budget 2014. [27484/13]
View answerWritten answers
It is assumed that the Deputy is referring to the introduction of a third rate of income tax of 48%, 49% or 50% to be applied on the portion of taxable incomes in excess of €100,000 per annum. In addition, it is also assumed that the threshold for the proposed new income tax rates 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 the new income tax rates would be of the order of €365 million, €415 million and €470 million respectively.
The above yields have been calculated on the basis of three separate alternative proposals and are rounded to the nearest five million. However, given the current band structures, major issues would need to be resolved as to how, in practice, such new rates could be integrated into the current system and how this would affect the relative position of different types of income earners.
These figures are estimates 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. They are, therefore, provisional and subject to revision.
Departmental Staff Recruitment
Questions (185)
Thomas P. Broughan
Question:185. Deputy Thomas P. Broughan asked the Minister for Finance when the post of Chief Financial Officer in his Department will be filled; and the number of candidates that have interviewed for this post. [27485/13]
View answerWritten answers
The Top Level Appointments Committee (TLAC) recently made a recommendation to the Minister for Finance on the filling of the Chief Financial Officer. Based on the interview and documentation, the Preliminary Interview Board identified those candidates who in the Board’s judgement are suitable for appointment to the post under consideration, generally to a maximum of 5 candidates. Following the conclusion of that process, one of those 5 candidates has been deemed successful in the competition and will be appointed to the post shortly.
Fuel Laundering
Questions (186)
Arthur Spring
Question:186. Deputy Arthur Spring asked the Minister for Finance the amount the Revenue Commissioners estimate has been lost to the Exchequer as a result of fuel laundering in the past three years. [27495/13]
View answerWritten answers
I am sure the Deputy will appreciate that estimating the extent of any illegal activity and the associated cost to the exchequer is inherently problematic. I am advised by the Revenue Commissioners that while there is no reliable estimate of the scale of the problem, they recognize that it represents a significant threat to the exchequer and to the legitimate trade. Revenue collects some €1.1 billion annually in excise duty from road diesel so the potential for loss of tax revenue from fuel laundering is very significant. For these reasons, Revenue has made action against fuel laundering one of its priorities and is implementing a comprehensive strategy to tackle the problem. This strategy includes the following elements:
- The licensing regime for auto fuel traders was strengthened with effect from September 2011 to limit the ability of the fuel criminals to get laundered fuel onto the market;
- A new licensing regime was introduced for marked fuel traders in October 2012, which is designed to limit the ability of criminals to source marked fuel for laundering;
- New requirements in relation to fuel traders’ records of stock movements and fuel deliveries were introduced to ensure data are available to assist in supply chain analysis;
- Following a significant investment in the required IT systems, new supply chain controls were introduced from January 2013. These controls require all licensed fuel traders, whether dealing in road fuel or marked fuel, to make monthly electronic returns to Revenue of their fuel transactions. Revenue is using this data to identify suspicious or anomalous transactions and patterns of distribution that will support follow-up enforcement action where necessary;
- An intensified targeting, in co-operation with other law enforcement agencies on both sides of the border, of enforcement action against suspected fuel laundering operations; and
- Following discussions with HM Revenue & Customs in the UK on regulatory measures to tackle the problem, the two administrations signed a Memorandum of Understanding in May 2012 on a joint approach to finding a more effective marker for use in both jurisdictions and an Invitation to Make Submissions was published in June 2012. By the deadline in November 2012, 12 submissions had been received and these are currently being evaluated.
Revenue’s enforcement strategy in the fuel sector has already yielded significant results. In the past two years 96 filling stations were closed for breaches of the licensing regulations. Since the beginning of 2010, 29 oil laundries were detected and closed and 13 oil tankers and 60 vehicles were seized. In the same period over 2.5 million litres of fuel were seized.
Departmental Agencies Issues
Questions (187)
Denis Naughten
Question:187. Deputy Denis Naughten asked the Minister for Finance if he will list the regulators which are accountable to his Department; the administrative cost of operating each regulator in 2012; the accommodation costs and the number of staff employed; the total income and expenditure in 2012 for each regulator; his plans to amalgamate some regulatory offices and to amalgamate some regulatory processes; and if he will make a statement on the matter. [27501/13]
View answerWritten answers
In response to the Deputy’s Question details in respect of regulators which are accountable to my Department are as follows:
Central Bank of Ireland
The Central Bank of Ireland is responsible for the regulation of most financial service providers and funds in Ireland. A statutory objective set out in the Central Bank Reform Act 2010 requires the Bank to carry out ‘…the proper and effective regulation of financial service providers and markets, while ensuring that the best interests of consumers of financial services are protected’.
The Bank’s Financial Regulation Directorates receive various services including premises, human resources administration, accounting, internal audit, statistical and information technology services from support services directorates in the Central Bank. The cost of these services in 2012 was €38.2 million.
At the end of 2012, 686 of the Central Bank’s staff were assigned to financial regulation activities. Total income for 2012 was €120.029 million and total expenses for 2012 were €110.641 million. In the context of the Public Service Reform Plan a critical review was undertaken of the possible integration of the regulatory function of the Pensions Board with the Central Bank. The review recommended against absorbing the functions of the Pensions Board into the Central Bank.
Registry of Credit Unions
The Registry of Credit Unions (RCU) is responsible for the registration, regulation and supervision of credit unions. In recognition of the unique nature of credit unions, a statutory position of Registrar of Credit Unions was explicitly created within the Central Bank of Ireland to assume responsibility for the regulation of credit unions. Under the Credit Union Act 1997 (as amended) the functions of the Registrar of Credit Unions are to regulate credit unions with a view to the:
- Protection by each credit union of the funds of its members; and the
- Maintenance of the financial stability and well-being of credit unions generally.
The Registry of Credit Unions aim is to promote a financially stable credit union sector that operates in a transparent and fair manner and safeguards its members' funds. It uses a combination of off-site analysis and on-site inspections in carrying out the regulatory process.
The number of staff engaged in the work of the Registry of Credit Unions in 2012 was 61.7.
Property Taxation Application
Questions (188)
Eoghan Murphy
Question:188. Deputy Eoghan Murphy asked the Minister for Finance if he is considering offsetting the liability of the local property tax against the cost of home repairs (details supplied). [27502/13]
View answerWritten answers
The Government decided a universal liability to the LPT should apply to all owners of residential property with limited exemptions. Limiting the exemptions available allows the rate to be kept low for those liable persons who do not qualify for an exemption. There are provisions permitting deferral of the tax in certain circumstances, targeted at cases of need where there is genuine inability to pay the tax. There is no provision for offsetting liability against home repairs, nor is it proposed to introduce such a relief.
Banking Sector Investigations
Questions (189)
James Bannon
Question:189. Deputy James Bannon asked the Minister for Finance if he will immediately establish an independent body to investigate the full circumstances of the banking collapse and bring those responsible to justice. [27524/13]
View answerWritten answers
The Deputy will be aware that my colleague, the Minister for Public Expenditure and Reform, indicated that he supported the objective of holding a legally robust, parliamentary banking inquiry when he announced last month the publication of his Department’s ‘Houses of the Oireachtas (Inquiries, Privileges and Procedures) Bill 2013’. While I understand the primary purpose of this Bill is to create a legislative framework for Oireachtas inquiries generally, it would be of direct practical assistance in facilitating a banking inquiry in accordance with a decision of the Houses of the Oireachtas in this regard. As this is a matter for the Houses of the Oireachtas themselves to determine however, it is not within my remit to take the action requested by the Deputy.
Tax Avoidance Issues
Questions (190)
James Bannon
Question:190. Deputy James Bannon asked the Minister for Finance his plans, if any, to increase corporation tax on large food supplying corporations within our domestic economy which are re-investing their profits abroad, much to the cost of our economy and our small shopkeepers; and if he will make a statement on the matter. [27525/13]
View answerWritten answers
I wish to advise the Deputy that companies are fully chargeable to Irish corporation tax at the 12.5% rate on profits arising from their trading activities in Ireland. A higher 25% rate applies in respect of investment, rental and other non-trading profits as well as profits from certain petroleum, mining or land trading activities, while capital gains are chargeable at a 33% rate. In recent times, there has been a consistent Government policy that our competitive corporation tax rate should be applied to a wide tax base. Therefore, all companies in Ireland are subject to the same rates on their profits which are generated in Ireland.
The transparent and indiscriminate nature of our corporation tax regime is one of its biggest strengths, both domestically and internationally. It is therefore important that this rate applies whatever size and whatever sector a company operates in. In addition, having different rates of corporation tax for different sectors could be in contravention of EU State Aid rules.
Bank Guarantee Scheme Administration
Questions (191)
Stephen Donnelly
Question:191. Deputy Stephen S. Donnelly asked the Minister for Finance the total amount covered, by bank, by the deposit guarantee scheme at the time of the September 2008 bank guarantee; the total additional amount therefore guaranteed, by bank, by the guarantee; the total to sum to the total liabilities guaranteed, by bank, once the guarantee came in to place; and if he will make a statement on the matter. [27535/13]
View answerWritten answers
The Deputy will be aware that the Credit Institutions (Financial Support) Scheme 2008 (CIFS Scheme) which commenced on 20 October, 2008, guaranteed specified liabilities, at the covered banks, which were in existence on or after 30 September, 2008. The banks covered by the CIFS Scheme at the time were: The Governor and Company of Bank of Ireland; Allied Irish Bank plc; the EBS Building Society; Irish Life and Permanent plc; Postbank Ireland Limited; Anglo Irish Bank Corporation; and Irish Nationwide Building Society.
The Deputy will appreciate that details of banks’ funding profiles including liabilities, guaranteed or otherwise, which are received by my Department in the course of official communications and which are not a matter of public record, are considered to be commercially sensitive. For this reason the following table shows the position of the covered banks combined as of 30 September, 2008, and not by bank as requested by the Deputy.
|
30 September 2008 |
Deposit Guarantee Scheme €million |
CIFS Scheme Liabilities €million |
Total Liabilities Guaranteed €million |
|
Total |
77,413.7 |
375,250.0 |
452,663.7 |
Property Taxation Exemptions
Questions (192)
Seán Fleming
Question:192. Deputy Sean Fleming asked the Minister for Finance the position regarding local property tax in respect of a person (details supplied); and if he will make a statement on the matter. [27553/13]
View answerWritten answers
Based on the information supplied by the Deputy it is not possible to give a definitive reply.
However, the following general information may be useful. An exemption from the charge to Local Property Tax (LPT) is available where a property that was previously occupied by a person as her or his sole or main residence has been vacated by the person for 12 months or more due to long term mental or physical infirmity. An exemption may also be obtained where the period is less than 12 months, if a doctor is satisfied that the person is unlikely at any stage to return to the property. In both cases, the exemption only applies where the property is not occupied by any other person. The exemption would not apply if the vacated property was jointly owned with others, as the owners are jointly and severally liable for payment of the tax.
If a property is exempt from LPT the property owner must still complete and submit an LPT Return indicating which category of exemption is satisfied.
For LPT purposes a residential property is defined as any building or structure (or part of a building) which is used as, or is suitable for use as, a dwelling. If a residential property is suitable for use as a dwelling but is unoccupied, it is still liable to LPT based on the valuation of the property. However, if the property is not suitable for use as a dwelling, it is not liable for LPT.
LPT is a self-assessed tax. If a property owner considers that her or his property is not suitable for use as a dwelling, s/he should notify the Revenue Commissioners without delay and arrange to provide relevant supporting documentation – for example, photographic evidence, or a report from a suitably qualified person such as a surveyor or an engineer. Based on the information provided by the property owner, Revenue will consider the claim and make a decision on the matter.
Each case will be considered on its merits and it is therefore not possible to provide a prescriptive list of criteria that would need to be met for a property to be deemed unsuitable for use as a dwelling. However, a property owner should consider whether the property is habitable by reference to the structure of the building; including whether the property has a roof, windows and doors, sanitary facilities, and services (water or electricity supply turned off or temporarily disconnected would not necessarily mean that a residential property is uninhabitable).
For a property that is in a poor state of repair, but still occupied or suitable for occupation, the property owner’s honest valuation of his/her property on 1 May 2013 will hold for LPT purposes for 2013, 2014, 2015 and 2016 and will not be affected by any repairs or improvements made to the property, or any changes in property prices generally, during this period. The next LPT valuation date is 1 November 2016 and any improvements made by that date, or any other factors that may impact on value, should be reflected in the property owner’s valuation of his/her property on that date and this new valuation will form the basis of LPT liability for the period from 2017 to 2020. A property that was not liable to LPT on 1 May 2013 on the basis that it was unsuitable for use as a dwelling will not be liable to LPT for the years 2013 to 2016. If such a property were to be refurbished to make it suitable for use as a dwelling by 1 November 2016 then it will be liable to LPT for 2017 and subsequent years.
Mortgage Arrears Proposals
Questions (193)
Pearse Doherty
Question:193. Deputy Pearse Doherty asked the Minister for Finance the number and names of all groups or individuals who made a submission to the Central Bank of Ireland's consultation on a review of the Code of Conduct on Mortgage Arrears. [27571/13]
View answerWritten answers
The Central Bank has advised me that the consultation on the review of the Code of Conduct on Mortgage Arrears (CCMA) closed on 10 April 2013. Approximately 230 submissions from consumers, industry, representative bodies and other stakeholders were received. The Central Bank has begun a process to review and analyse all submissions. It is expected that the revised CCMA will be published on the Central Bank’s website, together with all submissions received by the end of June 2013.
Question No. 194 answered with Question No. 179.
Debt Relief
Questions (195, 196)
Maureen O'Sullivan
Question:195. Deputy Maureen O'Sullivan asked the Minister for Finance if he will ask the Africa Development Bank, World Bank and IMF to release all information and evaluations of loans which contributed to Zimbabwe's sovereign debt; and if they will support and co-operate with an official, independent debt audit if one is undertaken by Zimbabwe. [27584/13]
View answerMaureen O'Sullivan
Question:196. Deputy Maureen O'Sullivan asked the Minister for Finance if he will work to put the debt cancellation needs of southern countries higher on the World Bank and IMF agenda; if he will support immediate debt write downs for countries with high levels of debt distress; and if he will support debt audits where questionable loans are being repaid and work for internationally agreed fair and responsible lending and borrowing practices in future. [27585/13]
View answerWritten answers
I propose to take Questions Nos. 195 and 196 together.
As a member of the World Bank and the IMF, Ireland has played a strong role in the development of a consensus regarding the debt position of the least developed countries. At an international level, Ireland has been strongly supportive of the full implementation of debt relief and, where appropriate, debt cancellation.
Ireland has contributed its full financial share of over €116m to the two main multilateral initiatives to address debt relief in the developing world, the Multilateral Debt Relief Initiative (MDRI) and the Heavily Indebted Poor Countries (HIPC) initiative. The MDRI came into effect on 1 July 2006 and provides for cancellation of eligible debt from the World Bank, the African Development Bank and the International Monetary Fund for many of the world’s poorer and most indebted countries. The HIPC initiative, which is implemented by the World Bank and the IMF, was launched in 1996 in order to reduce the debt burden of qualifying countries to sustainable levels but does not involve cancellation of debt. The aim of these initiatives is to relieve these countries from the burden of servicing debt and assist them in making progress on the UN Millennium Development Goals, with the overall objective of halving global poverty by 2015. Ireland will remain actively engaged in ensuring that international commitments to dealing with the debt burden on developing countries are met.
In relation to Zimbabwe, I understand that it has substantial debt arrears but that the relative political stability of recent years and the adoption of economic reforms has created a climate conducive to ongoing re-engagement and support on the part of the multilateral agencies and international financial institutions including in the areas of debt audit and loan evaluations. Although Zimbabwe is in arrears on its concessional borrowings from the IMF, the IMF recently restored Zimbabwe’s eligibility for technical assistance. The World Bank, the Board of which recently approved re-engagement with Zimbabwe, has also been working with Zimbabwe alongside other development partners such as the African Development Bank.
Ireland was represented at a meeting in London earlier this year of the informal international group known as the “Friends of Zimbabwe”. The communiqué of that meeting recognised the importance of Zimbabwe tackling its external debts and welcomed progress by the Government of National Unity and the IMF towards a Staff Monitored Program. Any such program would of course include analysis of Zimbabwe’s debt sustainability.