Written Answers Nos. 45-53
45. Deputy Brendan Smith asked the Tánaiste and Minister for Foreign Affairs and Trade if he has had any recent discussion with the Northern Ireland Secretary of State and with members of the Northern Ireland Executive in relation to the proposed Bill of rights; and if he will make a statement on the matter. [8804/14]
View answerI am in ongoing regular contact with the Secretary of State for Northern Ireland, and met with her most recently on 6 February, and with the political parties in Northern Ireland on issues related to full implementation of the Agreement, including a Bill of Rights, and will remain so.
I have made clear in statements in the Dáil and elsewhere and in my contacts with the Secretary of State and others that I believe that many of the contentious issues around culture and identity have rights at their core and progress on a Bill of Rights could provide a framework for the resolution of such issues.
46. Deputy Joe Higgins asked the Minister for Finance his views on the research conducted by a person (details supplied) that indicates a 2.2% effective rate of corporation tax in 2011; and if he will make a statement on the matter. [8483/14]
View answerThe issue of effective tax rates has been the subject of a number of Parliamentary Questions and discussions at the Joint Committee on Finance and Public Expenditure and Reform over the past 12 months.
I think it's important to note at the outset that two separate issues are often confused in discussions on the effective rate of corporation tax.
The first issue is the global rate of tax which is paid by multinational companies. This is a 'blended' rate and takes into account the amount of tax charged across all of the countries that a company trades in and not just Ireland.
The extremely low effective rate figures quoted in the research paper referred to in the question are based on a flawed premise. They are running together the profits earned by group companies in Ireland and in other jurisdictions and incorrectly suggesting that Irish tax does or should apply to both.
The figures are estimated by dividing the amount of Irish tax paid by a total profit figure that includes substantial profits made by companies that are not tax resident in Ireland.
Ireland cannot tax profits that are properly attributable to other jurisdictions.
The ability of some multinationals to lower their world-wide rate of tax using international structures reflects the global context in which Ireland and indeed all countries operate. The best way to effectively address this issue is for countries to work together at the international level and the appropriate action is being considered in this regard by the OECD as part of their project on Base Erosion and Profit Shifting and Ireland is participating fully in this process.
The second issue is the effective rate of tax applying in individual countries. Clearly, the domestic rate of tax paid in Ireland is within the control of the Irish tax system and Ireland is responsible for the amount of Irish corporation tax that is charged here. I want to re-emphasise that all companies operating in Ireland domestic businesses and multinationals - are chargeable to corporation tax at the 12.5% rate on the profits that are generated from their trading activities here. A higher 25% rate applies in respect of investment, rental and other non-trading profits, as well as certain petroleum, mining and land-dealing activities, and chargeable capital gains are taxable at the capital gains tax rate of 33%.
There are different ways of measuring the effective rate of corporation tax and there is no single internationally agreed comparative measure for this.
There are however a range of independent studies that show the effective rate in Ireland as being very close to the main headline rate of 12.5%. The European Commission's Taxation Trends in the EU 2013 indicates an effective corporation tax rate for Ireland of 14.4% per cent. The PricewaterhouseCoopers / World Bank 2014 report shows an effective rate of 12.3% for Ireland. I know that the assumptions being used in that latter study have been challenged and I am not claiming ownership of the figures but they are examples of the way that different methodologies can produce different results. In response to the growing interest in the subject, the Revenue Commissioners now publish an additional explanatory note with their annual Statistical Report.
The 2012 Revenue Statistical Report (which refers to 2011 data) indicates that aggregate net taxable profits, after taking account of various deductions, allowances, charges and reliefs, amounted to €40.1 billion while the total amount of corporation tax payable on these profits was €4.2 billion. This means that total corporation tax payable as a percentage of taxable profits was approximately 10.5 per cent for 2011.
While this percentage is lower than the 12½ per cent rate, this can be attributed to the availability of certain reliefs such as double taxation relief and the R&D credit for example.
The issue of effective rates of corporate tax was discussed at length at Committee Stage of Finance No. 2 Bill 2013 last November. In view of the significant confusion around the issue, it was agreed that my Department would prepare a report on the matter to be presented to the Oireachtas Finance Committee by the end of Quarter 1 this year.
This report is currently being prepared and will likely be published upon completion.
47. Deputy John O'Mahony asked the Minister for Finance further to Parliamentary Question No. 169 of 11 February 2014, his views on correspondence (details supplied); and if he will make a statement on the matter. [8611/14]
View answerI am informed by the Revenue Commissioners that Revenue and HM Revenue & Customs (HMRC) signed a Memorandum of Understanding in May 2012 on a joint approach to finding a more effective marker for use in both jurisdictions. On foot of this Memorandum, a joint Invitation to Make Submissions was published in June 2012, following which a number of proposals for a new marker were received. These submissions were subjected to a rigorous joint evaluation process by Revenue and HMRC that was completed late last year. As a result of this process, a new product was identified to mark rebated fuels in both countries. The new marker, which was announced on 13th February, is an important element of Revenue's overall strategy to tackle the problem of fuel laundering.
During the joint evaluation of submissions, laboratory testing showed that the chosen marker is significantly more effective than the current markers and is highly resistant to known laundering techniques.
The decision on the implementation of the new marker rested with the Board of the Revenue Commissioners and the Economic Secretary to the Treasury in the UK. I am assured by the Revenue Commissioners that all relevant issues were taken into account in the final decision on the marker. I am also advised that a number of solicitors' letters have been received in relation to this process and in the circumstances any further comment would be inappropriate.
I am informed also by the Revenue Commissioners that they will now begin a period of consultation with the oil industry and other affected sectors to progress the implementation of this new marker.
48. Deputy Joanna Tuffy asked the Minister for Finance the steps he will take to protect mortgage holders with Irish Nationwide Building Society in the event that their mortgages are sold to institutions not covered by the mortgage arrears resolution process; and if he will make a statement on the matter. [8613/14]
View answerI am fully aware of the concerns raised by the IBRC mortgage holders regarding continued protection for those customers following the sale of the loan book by the Special Liquidators. The continued applicability of the Code of Conduct on Mortgage Arrears (CCMA) depends on the regulatory status of the ultimate acquirer of the IBRC portfolio which will not be know with certainty until that process is completed next month.
However, given the concerns raised by IBRC customers I have instructed my officials to examine the issue fully with a view to bringing forward a solution if required. This matter is legally complex as it could affect contracts already entered into. It needs careful consideration. For that reason, my officials are currently examining the issue with their colleagues in the Central Bank and in the Attorney General's office.
It is important to note that in the event that NAMA acquire the IBRC residential mortgage book they are likely to apply best practice in relation to CCMA and they have confirmed that no borrower will be in any worse a position. Furthermore I am also pleased to note that a number of unregulated firms have indicated that they intend to voluntarily adopt the CCMA in order to manage acquired loans as they believe that following CCMA is in the best interests for both them and their customers.
49. Deputy Jack Wall asked the Minister for Finance if a person (details supplied) has an entitlement to money back based on his P60; and if he will make a statement on the matter. [8657/14]
View answerI have been advised by the Revenue Commissioners that they have written to the person concerned for the details necessary to establish his entitlements for 2013. On receipt of his reply a PAYE Balancing Statement (P21) will issue to the person concerned.
50. Deputy Pat Deering asked the Minister for Finance if he will launch an information campaign for the income tax credit on home renovations as very few persons seem to be aware of the scheme. [8666/14]
View answerI am informed by the Revenue Commissioners that an extensive information campaign has been underway since the Incentive was announced by me in my Budget speech last October.
The campaign was launched through information on the Revenue website which included detailed Frequently Asked Questions for both Homeowners and Contractors. This was highlighted through direct engagement with Contractor representative bodies and the national press. The website material was followed by an electronic and hard copy of a Home Renovation Incentive Guide for Homeowners. Copies of the Guide were distributed to Revenue's national network of public offices as well as the various Citizens Information Centres around the country. In addition, the Commissioners have responded to requests, presenting information to both Homeowners and Contractors at seminars and shows and have been proactive in contacting larger businesses and relevant representative bodies to assist on information for websites as well as the promotion and management of the Incentive.
The Revenue Commissioners have confirmed to me that they will continue to monitor awareness of the Incentive amongst the trade and the public and will continue to look at opportunities to maximise the publicity around the relief. They have committed to hosting information stands at upcoming high profile national trade shows, where their staff will provide detailed information to attendees from the general public.
To coincide with the release of the new electronic system in early April, which will facilitate the efficient operation of the Incentive, consideration will be given to conducting a media campaign depending on the level of awareness of the Incentive at that time. This could include, inter alia, issuing a formal Press Release, preparing articles for local as well as national media and appearance by Revenue staff on local radio to promote the Incentive. In any event, I am advised an updated Guide, along with extensive Questions and Answers for both Homeowners and Contractors, will be made available through the Revenue website.
While I note the Deputy's concerns, I am satisfied that the Commissioners have already done a substantial amount of work to publicise the Incentive for both the trade and the general public. In addition businesses and trade bodies have been widely advertising its availability and banks and credit unions are offering financing linked to the incentive. If necessary, I am advised, that publicity will be ramped up to inform interested parties about the Incentive when the electronic system is being launched.
51. Deputy Denis Naughten asked the Minister for Finance the estimated loss to the Exchequer as a result of fuel laundering; the steps taken to curb this practice; and if he will make a statement on the matter. [8712/14]
View answerI am sure the Deputy will appreciate that it is inherently difficult to estimate the extent of any illicit activity and its impact on the exchequer and the wider economy. The Revenue Commissioners advise me that, while there is no reliable estimate of the scale of illegal activity in the fuel sector, they recognise that the laundering of markers from rebated fuels represents a significant threat to exchequer revenues. Revenue has made action against this illegal activity one of its priorities and is implementing a comprehensive strategy to tackle the problem through enhanced supply chain controls, the acquisition of a more effective fuel marker and continued robust enforcement action. Revenue's 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 a joint process, Revenue and HM Revenue & Customs in the UK have identified a new product to mark rebated fuels in a move that will boost the fight against illegal fuel laundering in both jurisdictions.
Revenue also works with fuel sector representative bodies, which have been very supportive of the range of measures introduced to combat fuel laundering, to improve the integrity of the distribution system and minimise the risk of fraud. In support of this, I introduced a provision in the Finance (No. 2) Act 2013 that will make a supplier who is reckless in supplying rebated fuel for a use connected with excise fraud liable for the duty evaded. This new provision will strengthen Revenue's hand in dealing with those traders supplying fuel recklessly to dubious customers. Revenue has recently published guidelines for mineral oil traders which will assist them in identifying and avoiding such transactions. Revenue chairs the Hidden Economy Monitoring Group and has established regional sub-groups to facilitate traders reporting suspicious matters through their representative associations on a confidential basis. This information can assist Revenue in closing down the illicit trade by identifying traders supplying fuel to launderers and by identifying outlets that are selling laundered diesel. Revenue's enforcement strategy in the fuel sector has already yielded significant results. In the period from mid-2011 to end January 2014, 123 filling stations were closed for breaches of licensing conditions. Since the beginning of 2011, over 2.7 million litres of fuel have been seized and 29 oil laundries detected and closed down, including 9 oil laundries in 2013.
52. Deputy Denis Naughten asked the Minister for Finance his plans to review capital gains tax reliefs; and if he will make a statement on the matter. [8713/14]
View answerI have no plans at this time to carry out a general review of existing capital gains tax reliefs.
In recognition of the economic climate in recent years I and previous Ministers for Finance have sought to obtain an additional contribution from capital gains tax by increasing the rate as follows:
Disposals made: from 6 December 2012 onwards - 33%, from 7 December 2011 to 5 December 2012 - 30%, from 8 April 2009 to 6 December 2011 - 25%, from 15 October 2008 to 7 April 2009 - 22%, on or before 14 October 2008 - 20%.
Capital gains tax is one of a suite of taxes that plays an important role in the overall taxation system in place in Ireland. In terms of equity, it is appropriate that those who make capital gains should make a contribution in tax terms so that the entire tax burden does not only significantly fall on those who pay income taxes. Capital gains tax also plays a role in mitigating opportunities for tax avoidance by discouraging the conversion of income into capital gains to reduce tax liability.
Reliefs play an important role in relation to most taxes and capital gains tax is no different in this regard. Targeted business related capital gains tax reliefs are provided principally to ensure that business, while paying its share of capital gains tax, is not unduly hampered in terms of developing and growing its business or in passing on businesses to the next generation of business people.
The following capital gains tax reliefs are all geared towards assisting business:
- Appropriation to and from stock in trade (section 596 Taxes Consolidation Act (TCA) 1997)
- Entrepreneur relief (section 597A TCA 1997) (subject to a commencement order due to requirement for EU State Aid approval)
- Retirement relief (sections 598/599 TCA 1997)
- Transfer of business to a company (section 600 TCA 1997)
- Replacement of Qualifying Premises ( certain rented residential premises (section 600A, TCA 1997) [now only available in limited circumstances]
- Relief for farm restructuring (section 604B TCA 1997
- Disposals to authority possessing compulsory powers (section 605 TCA 1997)
- Transfer of assets on company reconstructions or amalgamation (section 615 TCA 1997
- Reliefs in relation to inter-group company transactions (sections 617 et seq.).
All reliefs are reviewed periodically and maintained, adjusted or abolished by reference to the circumstances that exist at the time relative to those that gave rise to their introduction.
Take Roll-over relief (Section 597), for example. Roll-over relief was introduced in 1975 when capital gains tax was first enacted. It allowed chargeable gains on disposals of business assets to be deferred provided the proceeds of disposal were reinvested in new business assets. This relief was reviewed and was removed in Finance Act 2003 from 4 December 2002 onwards, except in the case of eligible taxpayers who had rolled-over assets prior to that date. The abolition of rollover relief in late 2002 must be seen in the context of the introduction at that time of the single 12.5% rate of corporation tax on trading profits.
Another example of a business relief that was reviewed and amended is the capital gains tax farm retirement relief which was amended in Finance (No 2) Act 2013. This was extended to allow relief to a farmer who farmed for 10 years, has no children to whom to pass on the land, and who lets the farm for a period following retirement from active farming before ultimately disposing of the land. Prior to this such a farmer would not have been entitled to retirement relief.
Certain reliefs are introduced from time to time with a view to achieving a particular objective in particular circumstances.
Examples of such reliefs include:
- Relief for certain disposals of land and buildings (section 604A TCA 1997 - introduced by section 64, Finance Act 2012). This short-term relief was introduced to provide a stimulus to the property market at a time when there was virtually no activity in it. The intention being that the impact would be both direct (on estate agents, surveyors, etc) and indirect (on construction related activities) as well as encouraging the sale of commercial premises and long term investment in productive assets, thereby assisting in the creation of longer term employment. This is a targeted relief it only applies to certain land and buildings acquired during the period 7 December 2011 to 31 December 2014. Any such property acquired must be held for 7 years in order to qualify for full relief. Any disposal within the 7 year period gets no relief.
- Relief for farm restructuring (section 604B TCA 1997 introduced by section 48, Finance Act 2013). This relief was identified as desirable to assist farmers to become more viable by enabling them to restructure their land holdings without incurring a capital gains tax. This relief is a more focused form of relief than the more general roll-over relief that was in the main abolished from 4 December 2002.
- Entrepreneur relief (section 597A TCA 1997 introduced by section 45 Finance (No. 2) Act 2013). This is a CGT relief for individuals who reinvest the proceeds of previous asset disposals into new business ventures. The commencement of this relief is subject to EU State Aid approval. Lastly, I announced in my Budget 2014 speech, in conjunction with the Minister for Agriculture, Food and the Marine, that I would commission a review of tax reliefs available to farming. This review will include CGT reliefs available to farming. Any recommendations of the review will be considered in the context of Budget 2015.
53. Deputy Niall Collins asked the Minister for Finance if he has established an information officer, if this person is in charge of developing and implementing data protection in his Department; and if he will make a statement on the matter. [8744/14]
View answerUnder the Data Protection Acts 1988 and 2003, my Department as both a data controller and data processor has registered its details with the Data Protection Commissioner. Our recently recruited Compliance Officer is tasked with the supervision of the application of the Act within the Department.
