Friday, 16 Sep 2016

Written Answers Nos. 348 - 374

Tax Data

Questions (348, 349)

Róisín Shortall

Question:

348. Deputy Róisín Shortall asked the Minister for Finance the cost to the Exchequer of indexing the entry point to the 49.5% marginal rate of tax to wage growth for every 1% increase in wage growth. [26343/16]

Róisín Shortall

Question:

349. Deputy Róisín Shortall asked the Minister for Finance counting PRSI, income tax and the universal social charge, the percentage of income earners who pay tax on their income at each of the marginal rate bands with a breakdown for employed persons and the self-employed persons. [26344/16]

Written answers

Minister for Finance

I propose to take Questions Nos. 348 and 349 together.

The cost to the Exchequer of indexation to achieve the effect described by the Deputy is difficult to compute exactly.  The 49.5% marginal rate is comprised of three separate elements - income tax, USC and PRSI - and each is applied on a different tax base.  Furthermore, USC and PRSI are individualised whereas income tax may operate on a joint assessment basis.  The best approximation available is the cost of increasing Income Tax rate bands, as in most cases the point of entry into the higher rate of income tax is the point at which the 49.5% rate will begin to apply.  For each 1% increase in standard rate bands, the first and full year costs are estimated by the Revenue Commissioners to be of the order of €60m and €70m respectively.

These figures are estimates from the Revenue tax forecasting model using latest actual data for the year 2014, adjusted as necessary for income, self-employment and employment trends in the interim. They are estimated by reference to projected 2017 incomes, they are provisional and may be revised.

As regards marginal rates paid by income earners, I must point out that PRSI is a matter for my colleague, the Minister for Social Protection in the first instance.  I am advised by Revenue that the following tables provide a percentage breakdown of PAYE and self-assessed income earners at each income tax rate and Universal Social Charge (USC) rate. This information represents the out-turn figures based on actual tax returns from 2014, the most recent tax year for which such data is available.

Tax Rate	PAYE	Self-Assessed (Schedule D)	Total
Exempt	39%	31%	857,394
Marginal Relief	1%	2%	24,796
20%	41%	51%	937,419
41%	18%	16%	404,439
All	2,035,249	188,799	2,224,048

USC Rate	PAYE	Self-Assessed (Schedule D)	All
Exempt	30.48%	31.86%	680,430
2 & 4%	19.10%	20.91%	428,267
7%	50.38%	42.10%	1,104,802
3% Surcharge	0.04%	5.13%	10,549
Total	2,035,249	188,799	2,224,048

Stamp Duty

Questions (350)

Charlie McConalogue

Question:

350. Deputy Charlie McConalogue asked the Minister for Finance his plans to change the age of the stamp duty exemption for young farmers from 35 years of age to 40 years of age, in line with the recent changes in the Common Agricultural Policy; and if he will make a statement on the matter. [26386/16]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that, for the purposes of relief from Stamp Duty, a young trained farmer is defined in section 81AA of the Stamp Duties Consolidation Act 1999 as being under 35 years of age and holding the necessary qualifications on the date the deed of transfer is executed.

The 2013 reform of the Common Agricultural Policy introduced an age definition for a young farmer as a farmer under 40 years of age.  Any moves to bring existing measures into line with this definition would require legislative change and would be subject to EU state aid approval.

I have no plans to make any changes in this area at present. However, the matter will be kept under review with appropriate liaison between my officials and officials at the Department of Agriculture, Food and the Marine.

Tax Data

Questions (351)

Charlie McConalogue

Question:

351. Deputy Charlie McConalogue asked the Minister for Finance the number of farmers who availed of the various tax reliefs, specifically in the income tax, stamp duty, capital gains tax and inheritance tax codes for farmers, for the most recent year that this information is available, in tabular form; the cost of each relief to the Exchequer for that year; and if he will make a statement on the matter. [26387/16]

Written answers

Minister for Finance

I am advised by Revenue that they have published a detailed sectoral analysis of the farming sector in Ireland from the perspective of Revenue data, including information in respect of various reliefs used by farmers, in late 2015 and in summer 2016 published an update to the report with the most recent figures available. The 2015 report and the 2016 update are available at: http://www.revenue.ie/en/about/research/statistical-reports.html.

Tax Code

Questions (352)

Charlie McConalogue

Question:

352. Deputy Charlie McConalogue asked the Minister for Finance if he has examined the feasibility of simplifying the tax code in order that farmers whose gross income from farm payments and sales is less than €30,000, for example, would have the option of making a detailed tax return or choosing a system based on average gross margin on declared income for different types of farming as assessed by Teagasc each year; and if he will make a statement on the matter. [26388/16]

Written answers

Minister for Finance

The self-assessment tax system is based on giving taxpayers control and responsibility for their tax affairs. The self-assessment system applies uniformly to all self assessed taxpayers. Revenue provides comprehensive assistance to taxpayers in complying with the self-assessment obligations.

Every business sector, including farming, has a requirement to keep full and accurate records of their business; which are sufficient to enable them to make a proper return of income.  Changing the basis of taxation for a lower income cohort of one particular business sector would give rise to inconsistent treatment between, either different categories of self-assessed taxpayers, or self-assessed taxpayers with different levels of income. Additionally, a system on the lines suggested by the Deputy based on an average gross margin could result in certain taxpayers paying a higher amount of tax than they would be otherwise due to pay. Having different bases of calculating tax for different sectors would give rise to confusion for the taxpayers concerned and a need for additional support in understanding the requirements.

I am aware that Revenue has in place a range of supports to assist taxpayers making their tax return including the ongoing development of the Revenue Online Service (ROS) and the pre-population of certain information onto the taxpayer's online return. I understand that nearly 90% of farmers use ROS for filing their tax returns. 

For taxpayers not registered for Revenue's online services, there are a number of simplified paper income tax returns available, which aimed at reducing the administrative burden on any taxpayer whose tax affairs are not overly complex. The Form 11S is a short income tax return and I understand from Revenue that 5% of farmers are provided with the Form 11S. Additionally, for lower income taxpayers, Revenue makes available a two-page paper tax return (a Form 11P) including, where possible, certain pre-populated information. Some 20% of the cases to whom a Form 11P is sent are farmers.

Finally, I am also advised by Revenue that they are working on expanding the range of information that is pre-populated in taxpayer returns to include information about payments from the Department of Agriculture, Food and the Marine. This work will be particularly useful to the farming community and it is expected to be available for the 2016 annual tax return which is due to be filed in 2017.

Tax Code

Questions (353)

Charlie McConalogue

Question:

353. Deputy Charlie McConalogue asked the Minister for Finance if he has examined and costed the feasibility of permitting an investment in co-operative shares to be exempt from income tax and instead to tax such shares at the point of sale; and if he will make a statement on the matter. [26389/16]

Written answers

Minister for Finance

I am advised by the Revenue Commissioners that the information available from tax returns is in such a form that the costing requested by the Deputy cannot be provided. 

The proposal from the Deputy would appear to seek an exemption from income tax, USC and PRSI for income which is used to purchase shares in co-operatives. However, there is no indication as to whether the Deputy would then seek the imposition of a charge to income tax, USC and PRSI on the value of the shares when sold, in place of the current CGT charge in respect of any relevant gains.

It is important to note that any proposal to change the manner in which investments in shares in co-operatives are treated for tax purposes, might have consequences for shares of other types. In addition, the potential for such a change to be classed as State aid would have to be carefully considered.

EU Budget Contribution

Questions (354)

Michael McGrath

Question:

354. Deputy Michael McGrath asked the Minister for Finance the total estimated EU contribution in 2015 arising from the CSO growth revision; and if he will make a statement on the matter. [26396/16]

Written answers

Minister for Finance

Member State contributions to the EU Budget are based upon a formula which includes Traditional Own Resources (custom duties), a VAT based payment and a residual balancing component paid in accordance with each Member State's share of the EU Gross National Income (GNI). 

Ireland's contribution to the EU Budget in 2015 was €1,952 million and this will be set out in the Budgetary Statistics publication on the Department of Finance's website.

Under EU budget rules, GNI data revisions are taken into account in future year budget contributions. The estimated impact at this time of the 2015 CSO data revisions for EU Budget contributions for 2017 is set out in PQ 22880/16 of 19 July 2016.  As stated in that PQ, we currently estimate the impact on our EU Budget contribution for 2017 to be in the order of €280m when compared to the forecast underlying the Summer Economic Statement (SES). The final impact on the contribution is dependant on a number of variables, including the size of the overall EU budget for 2017, GNI movements in other Member States and other EU budget operational developments.

Gross National Income

Questions (355)

Michael McGrath

Question:

355. Deputy Michael McGrath asked the Minister for Finance the actions which have been taken by his Department in conjunction with the CSO and EUROSTAT regarding the calculation of gross national income; and if he will make a statement on the matter. [26397/16]

Written answers

Minister for Finance

The Central Statistics Office (CSO) published the National Income and Expenditure results for 2015 in July which show that Gross National Income grew by 18.7 per cent (GDP by 26.3 per cent).

The unprecedented figure is largely related to the activities of multinationals across a small number of sectors including the tech, pharmaceutical and aircraft leasing sectors.  In particular, corporate restructuring and a number of balance sheet reclassifications had a substantial impact.

Given the exceptionality of the data, statisticians from Eurostat visited the CSO at end-August.  I am informed that the meeting was a positive one, in which Eurostat officials were satisfied regarding the plausibility of the CSO's estimates.

The factors driving the exceptional growth last year have little, if any, impact on actual output and income developments in Ireland and greatly exaggerate the size of our economy.  However, it is also important to stress that more concrete indicators - such as consumer spending, taxation trends, employment growth - of the underlying levels of economic activity point to a continuation of a now firmly-rooted recovery.

It is also important to note that while the figures are heavily distorted by a relatively small number of very large multinationals, they are compiled in accordance with best international practice and statistical standards.  They measure what they are supposed to measure - this is an important message that should be communicated internationally.  But what is also clear is that in a small, open and very globalised economy such as Ireland, it is clear that the relevance of these figures as a metric by which underlying economic trends and changes in living standards can be assessed is considerably less than elsewhere.

With this in mind, the Central Statistics Office has put together a group of experts to provide guidance on how more relevant indicators could be produced and published alongside these figures in the future. My Department will be represented on this group. It is expected that this group will publish a report detailing their findings later this year.

Departmental Operations

Questions (356)

Michael McGrath

Question:

356. Deputy Michael McGrath asked the Minister for Finance the status of his Department's work on behavioural economic insights analysis with the ERSI on the issue and any actions arising; and if he will make a statement on the matter. [26402/16]

Written answers

Minister for Finance

I should clarify that my Department's work on 'behavioural economics concepts and their possible application to the Irish tax system' is separate from the joint research programme with the ESRI on The Macroeconomy and Taxation. The work on tax and behavioural economics is being conducted by officials from my Department. The aim of the work is to familiarise policymakers and tax specialists with behavioural concepts relevant for tax design and to provide information regarding alternative ways of approaching design. Once the work is completed, my Department will give due consideration as to how any insights might feed into tax policy analysis in future.

Irish Fiscal Advisory Council

Questions (357)

Michael McGrath

Question:

357. Deputy Michael McGrath asked the Minister for Finance his plans for the renewal of the terms of members of the Fiscal Advisory Council at the end of 2016; and if he will make a statement on the matter. [26404/16]

Written answers

Minister for Finance

Under the Fiscal Responsibility Act 2012 I, as Minister for Finance, appoint the members of the Irish Fiscal Advisory Council.  The legislation also stipulates that a Council member may not serve for more than two consecutive terms.  

The first term of office of two Council members will expire on 31 December 2016. These are Professor John McHale, who also serves as the Chair of the Council, and Mr. Sebastian Barnes.  Officials from my Department have been in recent contact with both of these Council Members and I am expecting a submission on the matter shortly. 

Any vacancies on the Council that may arise are filled in accordance with Government policy for appointments to State Boards.  This involves a recruitment competition run by the Public Appointments Service which results in a list of suitably qualified candidates that is submitted to me.

Departmental Reviews

Questions (358)

Niamh Smyth

Question:

358. Deputy Niamh Smyth asked the Minister for Finance when his Department's review of income averaging for the artist's exemption will be completed; the actions arising from the review; and if he will make a statement on the matter. [26405/16]

Written answers

Minister for Finance

As the Deputy will be aware, I made a commitment in Budget 2016 to examine the potential for income averaging for tax purposes for artists. This examination is currently ongoing. I will consider the outcome of the examination as part of my deliberations for the Budget, and any actions arising will be announced on Budget day, October 11, 2016. The review will also be published on Budget day.

Departmental Reviews

Questions (359)

Michael McGrath

Question:

359. Deputy Michael McGrath asked the Minister for Finance if his Department has undertaken a review of section 33AK of the Central Bank Act 1942; and if he will make a statement on the matter. [26406/16]

Written answers

Minister for Finance

The report of the Oireachtas Joint Committee of Inquiry into the Banking Crisis recommended that a full review should take place of section 33AK of the Central Bank Act 1942, to ensure that only documents deemed 'secret' which are independently reviewed by a High Court judge are withheld from any future Oireachtas inquiry.

My Department, under the stewardship of Minister of State Murphy, is working to achieve a holistic response to the recommendations of the Joint Committee.  This work has begun with Minister of State Murphy writing to other Ministers with responsibility for recommendations included in the report to seek updates on the actions being taken to address the Joint Committee's recommendations.  Minister of State Murphy has also met with Deputy Governor Cyril Roux to discuss the Government's response to the Joint Committee's recommendations.

In tandem with these actions, the Department of Finance and Central Bank have established a multi-disciplinary working group to identify the actions taken to address the Banking Inquiry's recommendations in the banking sector and within both bodies.  The responses of Ministers and the working group will form the basis of a Memorandum for Information which the Minister of State will bring to Government in the coming months.  A review of section 33AK of the Central Bank Act 1942 is being undertaken as part of this response.

Central Bank of Ireland

Questions (360)

Michael McGrath

Question:

360. Deputy Michael McGrath asked the Minister for Finance the actions his Department has taken arising from the review of Central Bank funding for its financial regulation; the timeframe for its implementation; and if he will make a statement on the matter. [26407/16]

Written answers

Minister for Finance

Following the joint public consultation published by the Department and the Central Bank in July 2015, I have approved a phased movement towards 100 per cent industry funding of the cost of financial regulation, contingent on the Central Bank agreeing to and implementing new cost control measures. This will commence in 2017 with a move from 50 to 65 per cent of regulation costs being borne by industry, subject to parameters on cost growth being implemented.

The inclusion of cost control measures in the phased increase of industry funding are to demonstrate that both the Central Bank and Government have considered and acted on the valid concerns raised during the industry funding public consultation.  Further, it should reassure Central Bank stakeholders that the commitment to cost control is firmly embedded in the Bank, and it is also an example of the Bank leading in best practice for the wider public sector. Any cost control parameters will be implemented with regard to protecting the Central Bank's statutory independence and ensuring regulatory best practice.

In terms of the timeframe for implementing the phased move, I have agreed an initial increase to 65 per cent in 2017, contingent on the Central Bank agreeing to and implementing cost control measures. The phasing of the remaining increases are yet to be agreed between the Department and the Central Bank. The rollout of the phased increase will take into account the unique characteristics of each sector in the industry and if appropriate may adopt different tracks to achieving 100 per cent funding in different industry sectors.

The Central Bank is at present working to agree the cost control parameters. When this work is concluded, its outcomes will be integrated into the Joint Feedback Statement on the Public Consultation.

Bank Levy

Questions (361)

Michael McGrath

Question:

361. Deputy Michael McGrath asked the Minister for Finance the status of the review of the bank levy calculation; and if he will make a statement on the matter. [26408/16]

Written answers

Minister for Finance

I, as Minister, announced in last year's Budget a review of the methodology for calculating the Bank Levy.

The review considered the performance of the bank levy to date, examined alternative calculation methodologies and practices in other jurisdictions. A public consultation was held to obtain the views of stakeholders in June 2016. The public consultation document was published on the Department website and is available to view at the following link: [http://www.finance.gov.ie/news-centre/press-releases/minister-finance-launches-public-consultation-financial-institutions-levy].

Following on from the evaluation undertaken by my Department, and taking into account the responses to the public consultation, a Budget submission on the Bank Levy has been prepared for my consideration.  I will announce my decision as part of the Budget on 11th October next.

European Banking Union

Questions (362)

Michael McGrath

Question:

362. Deputy Michael McGrath asked the Minister for Finance the status of his Department's work on the ad hoc working group on the European deposit scheme; and if he will make a statement on the matter. [26409/16]

Written answers

Minister for Finance

Following the recommendations of the Five Presidents' Report on the completion of the Economic and Monetary Union of 22 June 2015, the European Commission presented on 24 November 2015 a proposal to establish a European Deposit Insurance Scheme (EDIS). At the same time, the Commission published the communication "Towards the Completion of the Banking Union". On foot of this a temporary Ad Hoc Working Party (AHWP) on the Strengthening of the Banking Union was established within the Council. This AHWP, chaired by the rotating Presidency, is composed of representatives of all Member States at the appropriate level, regardless of their intention to participate in EDIS or not. The European Central Bank and Single Resolution Board attend as observers.

I believe EDIS is an essential part of the overall Banking Union project, particularly since it should ensure that savings are equally protected in all Member States, thus further weakening the link between banks and the sovereign. It is my view that EDIS should be in place as quickly as possible and should not be contingent on progress on other risk reduction measures.

My officials are engaging on an ongoing basis with the AHWP with the aim of achieving the introduction of EDIS as quickly as possible.  Under the Slovak Presidency the discussions have moved into a more technical phase as the current text is being discussed on an article by article basis. The Department is also working closely with the Central Bank to ensure that they are kept abreast of developments in this area and have the opportunity to provide comments on the issues being discussed.

Departmental Legal Cases

Questions (363, 364)

Michael McGrath

Question:

363. Deputy Michael McGrath asked the Minister for Finance the estimated timeframe for the Government's appeal of a case (details supplied); and if he will make a statement on the matter. [26410/16]

Michael McGrath

Question:

364. Deputy Michael McGrath asked the Minister for Finance when his Department expects an appeal of a case (details supplied) to be lodged; and if he will make a statement on the matter. [26411/16]

Written answers

Minister for Finance

I propose to take Questions Nos. 363 and 364 together.

The Government has authorised me to arrange for annulment proceedings to be brought before the General Court of the European Union in the Apple State case.  

The Attorney General has been requested to prepare the legal grounds in support of those proceedings and to take all other steps incidental to the conduct of those proceedings.

Ireland has two months and ten days to lodge these proceedings, which must be done by 10 November 2016.

EU Issues

Questions (365)

Michael McGrath

Question:

365. Deputy Michael McGrath asked the Minister for Finance the status of EU proposals on a common consolidated corporate tax base; and if he will make a statement on the matter. [26412/16]

Written answers

Minister for Finance

The European Commission's proposal for a Common Consolidated Corporate Tax Base (CCCTB) was orginally published in 2011.  No agreement was reached on the proposal and it was subsquently withdrawn by the Commission.

In June 2015, the Commission presented a strategy for the re-launch of the CCCTB as part of its Action Plan for Fair and Efficient Corproate Taxation.  The new proposal is due to be published later in 2016 although no publication date has been announced at this stage. 

Ireland and other Member States have not yet seen the details of this new proposal.  As tax remains in the competence of Member States, the agreement of all Member States would be required for the CCCTB to be introduced.

EU Directives

Questions (366)

Michael McGrath

Question:

366. Deputy Michael McGrath asked the Minister for Finance the timeframe for the implementation of the anti-tax avoidance directive; and if he will make a statement on the matter. [26413/16]

Written answers

Minister for Finance

The Anti-Tax Avoidance Directive was agreed by Member States following ECOFIN on 17 June 2016. The Directive includes five significant corporate tax anti-avoidance measures.  Three of the measures derive from the non-binding elements of the OECD BEPS process, with the remaining two measures coming from the European Commission's previous Common Consolidated Corporate Tax Base (CCCTB) Directive. 

With regards to the measures that are derived from the non-binding elements of the BEPS process, namely the controlled foreign company rules, the hybrid mismatch rules and the interest limitation rules, these measures must be implemented by Member States by 01 January 2019.  However, the provisions on interest deductions (the interest limitation rule) may be deferred until 2024 for countries that already have strong targeted interest rules. 

The Directive also proposes that an exit tax must be applied when a company moves its residence, its assets or a branch out of a Member State.  Ireland currently has an exit tax which will be reviewed to determine what changes may be needed to ensure it is in line with the Directive.  The exit tax will need to be implemeneted by 01 January 2020. 

Finally, the Directive also proposes that Member States introduce a general anti avoidance rule which disregards any non-genuine arrangements which are carried out by a company for the purpose of gaining a tax advantage.  Ireland in fact already has a similar General Anti-Avoidance Rule in our domestic tax law since the 1980s.  The general anti-abuse rule in the Directive will need to be implemented by 01 January 2019.

Departmental Legal Cases

Questions (367)

Michael McGrath

Question:

367. Deputy Michael McGrath asked the Minister for Finance if he has met with his counterparts from other EU member states regarding the State appeal on a case (details supplied); if he has received indications that other member states will issue observations on the case; and if he will make a statement on the matter. [26414/16]

Written answers

Minister for Finance

The Government has authorised me to arrange for annulment proceedings to be brought before the General Court of the European Union in the Apple State case.  The Attorney General has been requested to prepare the legal grounds in support of those proceedings and to take all other steps incidental to the conduct of those proceedings.  The appeal is to be lodged by 10 November 2016.

Member States have legal standing to intervene in all cases that go before the European courts and do so from time-to-time if it is considered that the case raises points of relevance for their country.

It is the view of the Government that our appeal is necessary to defend the integrity of our tax system; to provide tax certainty to business; and to challenge the encroachment of EU state aid rules into the sovereign Member State competence of taxation.  There are also a number of detailed and technical legal issues relating to state aid and tax that will be raised with the European Courts as part of our appeal.

At the informal ECOFIN meeting in Bratislava last weekend, I updated fellow Finance Ministers on the case from an Irish perspective.

If other Member States found that the issues we are raising are of relevance for their tax system, I would welcome their support for the Irish position.  The timeline for other Member States making such an intervention only begins after the Irish appeal is lodged so I wouldn't expect that they will have made up their mind at this early stage in the process.

NAMA Code of Conduct

Questions (368)

Michael McGrath

Question:

368. Deputy Michael McGrath asked the Minister for Finance if he has met with NAMA officials regarding recent revelations around Project Eagle; and if he will make a statement on the matter. [26415/16]

Written answers

Minister for Finance

Given the Deputy's question was received on Tuesday 13th September, I assume he is referring to the concerning allegations raised in the previous week's BBC Spotlight programme, particularly regarding former NAMA Northern Ireland Advisory Committee member, Frank Cushnahan. I can confirm I have not met with the NAMA Chairman since that BBC broadcast. NAMA have advised my officials that they have brought the matters raised in last week's BBC broadcast, regarding Mr Cushnahan, to the attention of both An Garda Síochána and the Standards in Public Office Commission. It is now appropriate for these bodies to determine how, or if, to proceed.

Tax Treaties

Questions (369)

Michael McGrath

Question:

369. Deputy Michael McGrath asked the Minister for Finance the Government's position on Action 15 of the BEPS action plan, developing a multilateral instrument to modify bilateral tax treaties; when he anticipates the Government will make a final decision on the instrument; and if he will make a statement on the matter. [26416/16]

Written answers

Minister for Finance

The OECD BEPS reports made a number of recommendations for how tax treaties can be updated to ensure that they do not facilitate double non-taxation.  The Multilateral Instrument is designed to give countries a way to update many or all of their treaties in one go without the need for bilateral renegotiations.

Ireland is actively involved in this work at the OECD which is progressing very well.  It is expected that early next year countries, including Ireland, will be invited to sign up to the Multilateral Instrument.  The Multilateral Instrument is an important part of the implementation of the BEPS recommendations. 

Once the Instrument is signed and ratified by countries it will update relevant tax treaties to ensure they are compliant with the new BEPS standards.

Tax Code

Questions (370)

Michael McGrath

Question:

370. Deputy Michael McGrath asked the Minister for Finance the status of the implementation of Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, transfer pricing guidelines, (details supplied); the timeframe for its implementation; and if he will make a statement on the matter. [26417/16]

Written answers

Minister for Finance

The OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations ('Transfer Pricing Guidelines') are the internationally recognised standard for the application of transfer pricing.  In general, Irish rules require that the principles in the Transfer Pricing Guidelines, specifically the version of the OECD Guidelines in place at 22 July 2010, must be followed when analysing whether a transaction between associated persons has been entered into at arm's length. 

The output from the OECD BEPS work on Actions 8, 9 and 10 sets out revisions to the Transfer Pricing Guidelines.  On 23 May 2016, the OECD Council approved revised Transfer Pricing Guidelines which incorporate the revisions from the BEPS work.  Countries will be expected in due course to update the references in their national tax laws to the revised OECD Transfer Pricing Guidelines.  

In terms of country by country reporting, in Finance Act 2015, I introduced country by country reporting in line with the OECD BEPS recommendation.  This requires multinational companies with a turnover of over €750 million to file reports of their activities on a country-by-country basis with the Revenue Commissioners. The reports will be shared among tax authorities through confidential information exchange mechanisms.   

The EU subsequently agreed a Directive requiring all Member States to introduce country by country reporting in line with the OECD approach.  Ireland already had legislation enacted prior to the Directive being agreed and was a strong supporter of the Directive.  Indeed Ireland was one of the first countries in the world to legislate for this type of country by country reporting.

Corporation Tax

Questions (371)

Michael McGrath

Question:

371. Deputy Michael McGrath asked the Minister for Finance when his Department will publish its analysis of the reason corporation tax receipts increased by €2.3 billion above forecasts; and if he will make a statement on the matter. [26418/16]

Written answers

Minister for Finance

Corporation tax receipts in Ireland are highly concentrated with a high proportion of receipts coming from the multinational sector.  The Revenue Commissioners have advised that about half of the €2.3 billion increase in Corporation Tax receipts is from a small number of large multinationals and is attributable to a variety of reasons including improved trading conditions, positive currency fluctuations, some timing factors and a number of one-off payments.

In order to get a better understanding of the increase in Corporation Tax receipts, Revenue analysed tax return and payment data for 2014 and 2015.  Although most of the returns for 2015 will not be filed until later this year, Revenue looked at the payments data to see if there were indications of any trends.  The Revenue analysis of the increase in Corporation Tax receipts (http://www.revenue.ie/en/about/publications/corporation-tax-receipts-2014-2015.pdf) showed that the main factor driving increased receipts in 2015 is likely to be profitability. 

Although Corporation Tax is concentrated in the multinationals sector, it is fair to say that the basis for the additional Corporation Tax being paid is relatively broad based with improved receipts across a number of different sectors and sized firms, including indigenous ones.  This was also evidenced in the Revenue report which showed that payments from indigenous companies were growing at a similar rate to the payments from multinationals albeit at lower monetary levels. 

I would point out that the majority of 2015 Corporation Tax returns are due to be filed later this year and I would fully expect that these returns will substantiate the advice received from the Revenue Commissioners.

Departmental Legal Cases

Questions (372, 373)

Michael McGrath

Question:

372. Deputy Michael McGrath asked the Minister for Finance if and when the (details supplied) state aid recovery fee will be placed in an escrow account; the total estimated amount due including interest; if the interest accumulating on this escrow account will be available to the Exchequer; the estimated interest revenue per annum; and if he will make a statement on the matter. [26419/16]

Michael McGrath

Question:

373. Deputy Michael McGrath asked the Minister for Finance if his Department or the Revenue Commissioners has had any communication with a company (details supplied) over the payment of the state aid recovery fee; when formal discussions will begin; when payment is expected; and if he will make a statement on the matter. [26420/16]

Written answers

Minister for Finance

I propose to take Questions Nos. 372 and 373 together.

On 30 August 2016, the European Commission issued a negative decision in the Apple State Aid case.

The Government profoundly disagrees with the Commission's analysis and will now challenge the decision before the European Courts. 

Notwithstanding this appeal, Ireland is required by law to recover the alleged State aid from the company.  As the amounts are subject to legal proceedings, the sums may be placed a ring-fenced escrow account, pending the outcome of the European Court process. 

The Commission has said that the recovery amount could total up to €13 billion plus interest.  This sum represents an estimation of what, in the European Commission's view, is the amount of additional tax that would have been paid over the past ten years had Ireland applied the European Commission's methodology. 

The exact amount is to be determined by the Irish authorities on the basis of a technical and detailed calculation which applies the Commission's methodology, as set out in the Final Decision document.  These amounts are also subject to an interest rate, set by the European Commission, calculated in accordance with Chapter V of Regulation (EC) No. 794/2004.  

The Commission has asked Ireland to calculate the exact amount and recover it from the company within four months.  As is normal in a process such as this, it will involve engagement with the company involved.

It is important to emphasise that Ireland is not subject to any fine or penalty arising from this Decision.

Tax Credits

Questions (374)

Niall Collins

Question:

374. Deputy Niall Collins asked the Minister for Finance if he will introduce an employer pay related social insurance tax credit for new hires for micro-businesses, in order to increase employment; and if he will make a statement on the matter. [26430/16]

Written answers

Minister for Finance

The issue of supporting micro-businesses, which are often also businesses in the early stages of their development, needs to be considered in the broader context of the multitude of expenditure and tax instruments which can assist these enterprises to succeed and grow.

For example, the 3-year start-up relief from Corporation Tax allows qualifying companies to obtain full relief on their corporation tax liability in the first three years of trading.  The value of the relief is linked to the amount of employer PRSI paid by the company, in order to link the scheme with the creation of jobs.  This relief was first introduced in 2009 as an incentive to encourage new business start-ups creating additional employment.  Budget 2016 extended the tax relief for start-up companies for a further three years so that companies which commence a new qualifying trade in 2016, 2017 or 2018 can obtain the a corporation tax relief in their first three years of trading. 

Microenterprises would be able to avail of the Employment and Investment Incentive (EII), which provides tax relief for investors who invest in qualifying Small to Medium Enterprises. All small and medium companies less than seven years old in qualifying trades, in all geographic areas of the country, can use the incentive, as can certain older companies which are expanding into new products or geographic markets.

Alternatively, the Start-Up Refunds for Entrepreneurs scheme provides a refund of tax paid in the previous 6 years to those in PAYE employment or those who have recently been made unemployed, where they invest funds into a new company.

The Start Your Own Business scheme provides for relief from Income Tax for long term unemployed individuals who start a new business as a sole trader. The scheme will provide an exemption from Income Tax up to a maximum of €40,000 per annum for a period of two years to individuals who set up a qualifying business, having been unemployed for a period of at least 12 months prior to starting the business.

A sector-specific incentive for micro-breweries also exists, which allows relief of up to 50% of the national rate of excise duty to micro-breweries producing 30,000 hectolitres or less per annum.

With regard to PRSI, in Budget 2016 I introduced a new tapered employee PRSI credit in order to smooth entry into the PRSI system for employees who were previously affected by the PRSI 'step effect', thereby removing a barrier to provision of additional hours of labour by affected employees.  I also increased the point at which an employer becomes liable to pay the higher rate of employer PRSI by €20 per week in order to mitigate the cost to employers of the increase to the national minimum wage.

The Deputy will also be aware that the Department of Social Protection provides financial support to companies engaging additional employees through the JobsPlus scheme.  JobsPlus offers differentiated levels of subsidies to employers to encourage them to focus recruitment on jobseekers who are longer term unemployed.  There is no limit on the number of new recruits per employer, and start-up employers may also avail of the scheme, on production of evidence that the business has commenced operations.

I am of the view that the above reliefs and supports are more appropriately targeted at supporting small enterprises and increasing employment than an employer PRSI credit of the nature proposed by the Deputy.