Peadar Tóibín
Question:113. Deputy Peadar Tóibín asked the Minister for Finance the amount, if any, carried over to 2015 as a result of Budget 2014 measures; and a detailed breakdown thereof. [25288/15]
View answerBudget Measures
Questions (113)
Written answers
It was estimated that there would be a small negative carryover into 2015, in the region of €21 million, as a result of Budget 2014 measures.
|
Tax Head |
2015 Carryover €m |
|
Income Tax |
+54 |
|
VAT |
-62 |
|
Excise Duties |
-8 |
|
Stamp Duty |
-5 |
I should point out that the exact impact of carryovers will be reviewed as part of the normal Budgetary process, as there are a lot of moving parts to be considered, such as economic growth, take up of various schemes and specific tax relevant factors, which could impact on the expected return from the measures.
Pension Provisions
Questions (114)
Peadar Tóibín
Question:114. Deputy Peadar Tóibín asked the Minister for Finance if the pension provisions of budget 2013 pertaining to contributions no longer receiving tax relief once the pension fund has exceeded the standard fund threshold has been enacted; if so, the amount the measures have generated, or if recently enacted, what they are planned to generate. [25289/15]
View answerWritten answers
I introduced changes in Finance (No. 2) Act 2013 to deliver on the commitment I made in Budget 2013 in the supplementary pensions area. The changes involve a reduction from 1 January 2014 in the value of the maximum allowable pension fund at retirement for tax purposes (the Standard Fund Threshold, SFT) from €2.3 million to €2 million and an increase from the current single factor of 20 used to value Defined Benefit pensions for SFT purposes to a range of higher factors varying with the age at which the pension is drawn down. This latter change places a higher capital value for SFT purposes on Defined Benefit pension entitlements accrued after 1 January 2014 and drawn down at retirement. The use of a range of capitalisation factors will improve the equity of the SFT regime as between Defined Contribution and Defined Benefit pension arrangements and between those retiring at earlier ages and those retiring at older ages.
The Deputy might note that the SFT regime does not involve the non-application of tax relief to pension contributions. Instead, the regime addresses the problem of pension overfunding and excessive pension accrual by imposing a much higher effective tax charge on the value of retirement benefits above set limits when they are drawn down, thus discouraging the building up through contributions of large pension funds in the first place or unwinding the tax advantage of such overfunding.
The yield from the changes made to the SFT regime is estimated at €120 million in 2014 and in a full year.
Tax Relief Data
Questions (115)
Peadar Tóibín
Question:115. Deputy Peadar Tóibín asked the Minister for Finance if he will provide a list of the exemptions applicable for withholding tax, with an associated cost for each exemption; and an analysis of the exemptions that could be abolished; the impact of their abolition, and the savings that would generate for the Exchequer. [25290/15]
View answerWritten answers
I understand that the Deputy is referring to the exemptions applicable in respect of Dividend Withholding Tax (DWT). The legislation relating to DWT is contained in Chapter 8A of Part 6 (sections 172A to 172M) and Schedule 2A of the Taxes Consolidation Act, 1997 (TCA 1997). The primary purpose of DWT is to collect tax at source from dividend payments and other distributions made by Irish resident companies to Irish resident individuals who are chargeable to income tax on such distributions (with a credit allowed for DWT deducted).
Section 172C TCA 1997 provides that certain recipients of distributions are specifically excluded from the scope of the DWT. The categories of persons excluded from DWT under this section include: - Irish resident companies; - pension schemes, managers of approved retirement funds and PRSA administrators; - qualifying employee share ownership trusts; - collective investment funds and exempt unit trusts; - managers of special savings accounts and special portfolio investment accounts; - charities; - athletic or amateur sports bodies; and - permanently incapacitated individuals and thalidomide victims who are exempt from tax in respect of income arising from the investment of compensation payments awarded for the benefit of such persons. In addition, Section 172D TCA 1997 provides that the following non-resident persons qualify for exemption from DWT: - individuals who are neither resident nor ordinarily resident in the State and who are resident in an EU Member State or in a country with which Ireland has a tax treaty; - companies which are not resident Ireland and - which are resident in another EU Member State or tax treaty country and not controlled by Irish residents; - which are ultimately controlled by a person or persons resident in another EU Member State or tax treaty country; or - the main shares of which, or the main shares of the parent company or companies of which, are substantially and regularly traded on a recognised stock exchange in an EU Member State or tax treaty country. It should be noted that the exemptions contained in sections 172C and 172D TCA 1997 are not automatic and must be established by means of an appropriate declaration of entitlement to exemption completed by the applicant. I am informed by the Revenue Commissioners that, while they do not have a statistical basis for compiling estimates of the cost of the various exemptions from DWT, such exemptions are provided in respect of persons or bodies that are not chargeable to tax in respect of the dividend income concerned. Accordingly, if these exemptions were to be abolished, any DWT deducted would have to be refunded. This would result in an additional administrative burden for the recipient of the dividend and for Revenue and, ultimately, no net additional yield to the Exchequer.
Question No. 116 answered with Question No. 90.
Financial Services Regulation
Questions (117)
Peadar Tóibín
Question:117. Deputy Peadar Tóibín asked the Minister for Finance the savings that would accrue from moving the entire cost of regulation of the financial sector onto the industry, as opposed to the current 50%. [25292/15]
View answerWritten answers
The Central Bank's total funding requirement for financial regulation activity is determined on an annual basis by the resources required to discharge its legal responsibilities under domestic and EU law. Section 32D and 32E of the Central Bank Act 1942, as amended, provide that the Central Bank Commission may make regulations relating to the imposition of levies and fees on the financial services sector in respect of the recoupment of the costs of financial regulation. Regulations made under Section 32D and 32E of the Central Bank Act 1942, or any amendment or revocation of these regulations, do not take effect until approved by the Minister for Finance.
The financial services industry currently funds 50% of the costs incurred by the Central Bank for financial regulation with certain exceptions including the banks which had participated in the Eligible Liabilities Guarantee Scheme, AIB, Bank of Ireland and Permanent TSB, which are required to fund 100% of the Central Bank's regulatory costs. Credit Unions currently contribute approximately 8% to the cost of their regulation.
The current 50% funding arrangement translates into a corresponding reduction in the annual surplus remitted by the Central Bank to the Exchequer. I have been informed by the Central Bank that it is estimated that €67 million of the Central Bank's 2015 surplus income will be redirected, to make up for the difference between the costs of regulation and the funding received from the financial services industry.
My Department and the Central Bank will shortly issue a joint consultation paper to canvass views on the potential for changing the current funding model. I am cognisant of the increased regulatory burden on industry in recent years and the need to ensure that any changes to the current funding model do not adversely impact the competitiveness of the financial services sector, which is a source of high value employment in Ireland.
Vehicle Registration
Questions (118)
Peadar Tóibín
Question:118. Deputy Peadar Tóibín asked the Minister for Finance the cost of abolishing the €500 administration fee deducted from repayable Vehicle Registration Tax, when importing a car. [25293/15]
View answerWritten answers
Assuming that a modest year-on-year growth in value, number, and depreciation of vehicles taken out of the State under the Export Repayment Scheme the full year cost of abolishing the fee in 2016 would be €1 million. I would point out that the €500 administration fee assisted with the initial costs of the establishing the Scheme in the first place and now assists with the recurring costs of administering the Scheme.
Tax Yield
Questions (119)
Peadar Tóibín
Question:119. Deputy Peadar Tóibín asked the Minister for Finance the annual revenue that would be raised from tax on spread betting, involving shares and stock options gains taxed at 20%. [25294/15]
View answerWritten answers
In relation to spread betting on financial instruments, the Central Bank authorises firms under the Markets in Financial Instruments Directive (MiFID) to provide investment services which can include spread betting services. The Central Bank has informed me that there are currently no MiFID authorised spread betting firms supervised by the Central Bank. Accordingly, there is no basis for compiling an estimate of the gain to the Exchequer that would arise from the tax outlined by Deputy.
The following revised reply was received on 30 June 2015
In relation to spread betting on financial instruments, the Central Bank authorises firms under the Markets in Financial Instruments Directive (MiFID) to provide investment services which can include spread betting services. The Central Bank has informed me some firms do have the appropriate authorisation to provide spread betting services but that the annual income from spread betting activities could not be accurately provided as those firms may provide additional investment services. Furthermore, they cannot provide data on the net gains accruing to any individual client. Accordingly, there is no basis for compiling an estimate of the gain to the Exchequer that would arise from the tax outlined by Deputy.
Tax Yield
Questions (120)
Peadar Tóibín
Question:120. Deputy Peadar Tóibín asked the Minister for Finance the annual revenue that would be raised from a tax on pay-related social insurance of 5% and 10.75% on all stocks awards, approved profit sharing schemes and share option exercises by employees. [25295/15]
View answerWritten answers
I am informed by the Revenue Commissioners that the information in respect of stock awards, Approved Profit Sharing Schemes and share options exercised by employees is not captured in such a way as to provide a basis for compiling an estimate of the gain to the Exchequer that would arise from a tax or Pay Related Social Insurance charge outlined by the Deputy. Accordingly, the information requested by the Deputy is not available.
Tax Yield
Questions (121, 122, 123)
Peadar Tóibín
Question:121. Deputy Peadar Tóibín asked the Minister for Finance the annual revenue that would be raised by applying a minimum of 20% tax to all Real Estate Investment Trust income. [25296/15]
View answerPeadar Tóibín
Question:122. Deputy Peadar Tóibín asked the Minister for Finance the annual revenue that would be raised by applying a minimum of 25% tax to all Real Estate Investment Trust capital gains. [25297/15]
View answerPeadar Tóibín
Question:123. Deputy Peadar Tóibín asked the Minister for Finance the annual revenue that would be raised if the non-resident withholding tax exemption was removed for Real Estate Investment Trusts. [25298/15]
View answerWritten answers
I propose to take Questions Nos. 121 to 123, inclusive, together.
I am informed by the Revenue Commissioners that there are currently four Real Estate Investment Trusts ("REITs") established and operating in Ireland.
The function of the REIT framework is not to provide an overall tax exemption, but rather to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply to property investment via a corporate vehicle. As such, the estimated cost attached to REITs relates not to an exemption from tax, but rather to the move from direct taxation of rental income in the hands of investors, to the taxation of dividends distributed to investors from REIT profits arising from that rental income. The REIT legislation requires that 85% of all property income profits be distributed annually to shareholders.
In general, the trading profits of companies in Ireland are subject to Corporation Tax at 12.5%. Rental profits of companies are subject to Corporation Tax at 25%. Rental profits arising in a REIT are exempt from Corporation Tax. However, profits from any other activities are subject to Corporation Tax in the normal way.
In answer to the question as to how much annual revenue would be raised by applying a minimum rate of Income Tax of 20% to all REIT income, REITs are publically listed companies, meaning their Financial Statements are publically available, but the specific figures required to calculate their rental profit (the portion of profit that is exempt) is not necessarily available in these public documents. For reasons of taxpayer confidentiality, it would be inappropriate for me to comment on specific details of rental profit, if any, of the limited number of REITS currently operating in Ireland.
In answer to the question as to how much annual revenue would be raised by applying a minimum rate of tax of 25% to all REIT Capital Gains, REITs are investment vehicles that are specifically designed to hold rental investment property. They are focused on long-term holding of income-producing property. They are not designed specifically to undertake development activities, or as a vehicle for short-term speculative gains. There is an exemption from Capital Gains Tax for a REIT on the sale of properties from its property rental business. It is not possible to predict when (or if) a REIT may sell some (or all) of its rental property portfolio or to predict what gain, if any, may arise on such hypothetical future sales.
In answer to the question as to how much annual revenue would be raised if the non-resident withholding tax exemption was removed for REITs, I can confirm there is no such exemption. In general, distributions (i.e. payments) from Irish resident companies to Irish shareholders are subject to Dividend Withholding Tax ("DWT"). Payments made to non-resident shareholders are generally exempt from DWT. There is no exemption from DWT for payments made from a REIT from profits arising from its property rental business to non-resident shareholders, as the general DWT exemption does not apply in such circumstances. However, non-resident investors who are resident in countries with which Ireland has a double taxation agreement (DTA) may be able to reclaim some of the DWT, if the relevant DTA permits. Non-resident investors who are resident in countries with which Ireland does not have a DTA will suffer DWT on the full amount of the distribution.