Dáil Éireann Debate, Wednesday - 24 June 2015
107. Deputy Peadar Tóibín asked the Minister for Finance the revenue that would be raised for the Exchequer by increasing withholding tax on royalties, where it applies, from 20% to 22%; 23%; 24%; and 25%. [25282/15]
View answerIt is assumed that the Deputy is referring to the withholding tax applied on Irish patent royalty income.
I am advised by the Revenue Commissioners that payments of patent royalties are subject to withholding tax at the standard rate of income tax under Section 238 of the Taxes Consolidation Act 1997 (TCA). While this is subject to certain exceptions, the requirement to deduct withholding tax applies, inter alia, where such payments are made to an Irish resident company or individual. Any tax so deducted is set off against the Corporation Tax liability of the company or, as the case may be, the Income Tax liability of the individual for the period of assessment in which the payment received is taken into account.
Under Section 239 of the TCA, withholding tax deducted by an Irish resident company in respect of payments made from which Income Tax is deductible, including patent royalty payments, is treated and payable as Corporation Tax for the accounting period in which the payment is made by the company and the company is required to include such tax in its pay and file returns for that accounting period.
While the annual Corporation Tax returns filed by companies provide data on the total amount of tax payable under Section 239, they do not separately indicate the amount of such tax that is attributable to tax deducted in respect of patent royalty payments.
Accordingly, Revenue does not have a statistical basis for providing the tax yield estimates requested by the Deputy.
