Micheál Martin
Question:178. Deputy Micheál Martin asked the Minister for Finance if progress is being made on the programme for Government commitment on tax exiles; and if he will make a statement on the matter. [43145/13]
View answerTuesday, 19 November 2013
Questions (178)
Written answers
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.
The Deputy may be aware I removed the “citizenship” condition for the Domicile Levy to ensure that individuals cannot avoid the levy by renouncing their citizenship. The first year for which the changes apply is tax year 2012; the levy payment for that year was due on 31 October 2013 or on 14 November 2013 for those filing online.
Other measures in recent budgets to increase the tax take from high earners will have an impact on so-called “tax exiles”, such as the High Earners’ Restriction, the increases in Capital Gains Tax and Capital Acquisitions Tax (CAT) rates, and the reductions in the CAT tax-free thresholds.
Apart from the Domicile Levy, 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 present rules are considered to be consistent with international practice and in particular with OECD standards. It is the view of the Government that our interests would be best served by operating our residence rules within the best practice guidelines of the OECD.
A public consultation on tax residence rules was undertaken last year and the submissions received have been published. Most submissions stated the present rules are considered clear and workable and the clarity, certainly and stability of our domestic tax regime enables us to compete effectively in the international economic context. Significant concern was expressed regarding potential impact on Foreign Direct Investment, and that such changes could inhibit investment in Ireland, and result in a loss to the Exchequer rather than raise money. Concerns were similarly expressed about changing the rules with a view to dealing with a small number of cases, and that for a likely small additional yield generated a disproportionate effect could result on a larger proportion of non-residents, and bring the Irish tax regime out of line with international standards.
I am keeping this area under review.