Written Answers Nos. 146-165
146. Deputy Pearse Doherty asked the Minister for Finance if the Revenue Commissioners request details of foreign PPS numbers, for example, an Australian tax number, from persons who have worked abroad for the landlord's tax refund of HAP payments; and if he will make a statement on the matter. [36368/18]
View answerI am advised by Revenue that, in general, where loans are used to purchase, improve or repair rented residential premises, section 97(2J) of the Taxes Consolidation Act 1997 (TCA 1997) operates to impose restrictions on the amount of loan interest accruing between 7 April 2009 and 31 December 2020 that qualifies as a deduction against rental income. However, in accordance with section 97(2K) TCA 1997, those restrictions do not apply where in the period from 1 January 2016 to 31 December 2019, a landlord rents residential premises for a period of 3 years to a tenant who is in receipt of certain social housing supports. In such a case, when computing taxable rents from the property in question, the landlord may deduct the full amount of loan interest accruing in that 3-year period in respect of money borrowed to purchase, improve or repair that property.
In effect, the amount of the interest accrued in each year of the 3-year period is rolled-up and treated as accruing on the day after the 3-year period ends. Relief for this rolled-up interest is then obtained by way of a claim to Revenue after the end of the period. Revenue advise me that the interest deduction is claimed on the landlord’s tax return. If the individual is non-resident for the year of assessment, the tax return requires details of the foreign tax identification number to be provided.
Revenue further advise me that to qualify for relief under section 97(2K) TCA 1997, the landlord must submit a Declaration of Undertaking Form to the Residential Tenancies Board (RTB). The undertaking commits the landlord to letting the relevant property to a qualifying tenant for the 3-year period and must be submitted at the same time as the tenancy is required to be registered in accordance with section 134 of the Residential Tenancies Act 2004 (i.e. within 1 month of the start of the tenancy).
147. Deputy Sean Fleming asked the Minister for Finance if his attention has been drawn to the extra costs incurred by self-employed persons who have to operate the E relevant contracts tax and almost in all cases need to employ an accountant to deal with these issues whereas under the previous system many self-employed persons could operate the system on their own without the cost of having to pay accountants in most cases a minimum of €1,000 per annum out of their self-employed income; and if he will make a statement on the matter. [36377/18]
View answerI am advised by Revenue that Relevant Contracts Tax (RCT) is a withholding tax mechanism designed to improve tax compliance in certain industry sectors that were historically identified as presenting compliance risks, namely the construction, meat processing and forestry sectors. It operates in a similar manner to other withholding taxes including those in place in respect of share dividends and certain professional services.
A paper based withholding system was in place until 1 January 2012, when the electronic RCT (eRCT) system was introduced. The electronic system streamlined the administration of RCT, reduced the opportunity for fraud, improved the cash-flow position of compliant subcontractors and significantly reduced the compliance burden for persons operating the tax. For example, eRCT eliminates more than 1 million paper returns annually, reducing the cost of compliance to business by an estimated €85 million. In addition, Revenue uses the data collected through the eRCT system to pre-populate annual tax return forms thereby further assisting taxpayers to meet their obligations while also reducing compliance costs.
Revenue has assured me that the eRCT system is a flexible, user-friendly tool that can easily link in with other software packages that Principal Contractors can use to manage their own financial affairs as well as fulfil their RCT obligations. Revenue has also confirmed that the eRCT system is supported by extensive published guidance and it should not be necessary for taxpayers to engage a tax agent to operate it.
148. Deputy Sean Fleming asked the Minister for Finance the positions in his Department and the organisations under its aegis that have arrangements in place for lo-call numbers or 1800, 1850 and 1890 telephone numbers for members of the public to contact his Department or organisations under its aegis; the number of these that are completely free to call for persons who use mobile telephones and may incur major bills telephoning such organisations; if the situation will be reviewed; and if he will make a statement on the matter. [36399/18]
View answerIn response to the Deputy, I can confirm that an 1890 lo-call phone number, in addition to a landline phone number, is available for members of the public to contact my Department. These numbers are available on the www.finance.gov.ie website.
The 1890 number provided will incur a cost to persons calling my Department using a mobile phone, the cost of which is dependent and determined by the mobile operator used. A review is underway to examine ways of reducing costs incurred by members of the public when contacting my Department, with consideration given to possible alternatives to the 1890 service.
I am informed that 13 of the 17 bodies under the aegis of my Department do not have arrangements in place for lo-call numbers or 1800, 1850 and 1890 phone numbers for members of the public to contact them. A number of these 13 bodies are not public facing, and as such, do not in general have dealings with the public. They include the Irish Bank Resolution Corporation which is in liquidation, the Credit Union Advisory Committee which is a committee that advises the Minister for Finance on credit Union matters and meets regularly in my Department’s offices, the Credit Union Restructuring Board which has completed its remit and is awaiting legislation to wind-down, and the Social Finance Foundation which is a wholesale lender of social finance. The remaining 9 bodies are the Disabled Drivers Medical Board of Appeal, the Office of the Comptroller and Auditor General, the Financial Services and Pensions Ombudsman, the Investor Compensation Company DAC, the Irish Financial Services Appeals Tribunal, the Irish Fiscal Advisory Council, the National Asset Management Agency, the National Treasury Management Agency and the Tax Appeals Commission. These Bodies have indicated that they currently have no plans to review these arrangements.
Four of the bodies under my Department’s aegis have arrangements in place for lo-call numbers or 1800, 1850 and 1890 phone numbers. They are the Central Bank of Ireland, the Credit Review Office, the Strategic Banking Corporation of Ireland and Office of the Revenue Commissioners.
The Central Bank of Ireland has 1890 phone numbers in place for members of the public for general enquiries, queries on online regulatory returns by firms, the making of protected disclosures and to purchase collector coins. The Central Bank indicates that the charge attached to calling their 1890 numbers is dependent on the mobile phone provider, specifically in the case of those using pre-pay bundles. In order to offer callers a choice, it also has Dublin landline numbers for each of these purposes. It intends to continue to provide a choice of numbers.
The Credit Review Office has an 1850 flat rate number in place that operates at a maximum cost (of 31c) per call. They have no plans to review this at present.
The Strategic Banking Corporation of Ireland has an 1800 Freephone number which is a helpline for the Brexit Loan Scheme.
As well as twenty eight 1890 numbers in place, the Office of the Revenue Commissioners has an 1800 Freephone number for the reporting of drug and tobacco smuggling. It has been actively seeking ways to reduce the telephone cost burden for customers, including exploring alternatives to the 1890 service. This included evaluating new telephony technology which could provide a robust, reliable and scalable telephone service (Revenue received approx. 2.5m calls per year) without relying on 1890 architecture. Revenue is now in a position to begin rolling out new technology for its telephone service by the end of 2018/early 2019 using ‘Session Initiation Protocol (SIP)’ based telephony. This will allow a move away from using the 1890 infrastructure to standard landline numbers for all its services.
149. Deputy Thomas P. Broughan asked the Minister for Finance the estimated cost of the recruitment of 15 additional international tax specialists at principal officer level; and if he will make a statement on the matter. [36419/18]
View answerI wish to inform the Deputy that the Management of the Department of Finance is not confined to the Executive Board only. The Senior Management Group (the Executive Board, Principal Officer and equivalent grades) is central to consistency in governance, leadership and management of the Department.
Responsibility of Head of Business Unit is assigned to officers at Principal level or equivalent. These responsibilities sit within the overall management framework for the Civil Service and the Department. Their role includes management of department/division, management of resources, management of unit business and management of policy advice and implementation.
In terms of the estimated cost of recruiting additional officers at Principal Officer Higher grade the annual salary scales are as follows:
Principal Higher Non PPC: €86,817.00 - €90,293.00 - €93,782.00 - €97,258.00 - €100,228.00
Principal Higher PPC: €91,259.00 - €94,912.00 - €98,583.00 - €102,246.00 - €105,370.00.
Each point on the scale equates to incremental progression. It should be noted that these figures do not include the additional costs associated with their employment such as Employer's PRSI and the provision of necessary resources associated with their employment.
150. Deputy Thomas P. Broughan asked the Minister for Finance when section 28 of the Finance Act 2016 will come into effect; and if he will make a statement on the matter. [36423/18]
View answerSection 28, Finance Act, 2016 amended section 598(3A) of the Taxes Consolidation Act 1997 which grants relief from capital gains tax in respect of compensation which has been received by a person under the scheme of compensation in respect of the decommissioning of fishing vessels implemented by the Minister for Agriculture, Food and the Marine. As part of the policy to encourage decommissioning of such vessels, this extended the terms of CGT retirement relief for those receiving such compensation under the scheme and lengthened the time over which recipients of such relief could pay balancing charges for capital allowances on vessels. At the time of the passing of the Act, the introduction of the relief was subject to a commencement order to be signed by the Minister for Finance with the consent of the Minister for Agriculture, Food and the Marine.
I understand that Ireland’s European Maritime and Fisheries Fund Operational Programme 2014-20 provided for the implementation of a scheme to incentivise the permanent decommissioning of fishing vessels in certain imbalanced fleet segments. An Bord Iascaigh Mhara commissioned consultants to carry out a cost benefit analysis study of the proposed scheme. The consultants concluded that while the proposal could have a positive return, they recommended against a decommissioning scheme proceeding, as they considered that there was a significant risk that the benefits of the scheme would be eroded by use of the decommissioning premiums to fund re-entry to the fleet using off-register fleet capacity. The Department of Agriculture, Food and the Marine sought solutions to this issue with representatives of the fishing industry, but no legally robust solutions were identified. I understand that there was also a number of legal and State Aid obstacles to resolving the off-register obstacle.
As a result I believe that the Minister for Agriculture, Food and the Marine concluded that a decommissioning scheme could not proceed. Under the EMFF Regulation, Permanent Cessation schemes were no longer permitted after 31 December, 2017. On that basis, and as no scheme will now be introduced, it is not intended that section 28 Finance Act, 2016 will now be commenced.
153. Deputy Declan Breathnach asked the Minister for Finance if the 9% VAT rate for the hotel sector will be maintained in budget 2019, which would bring Ireland in line with tourism VAT rates in other competing European countries; and if he will make a statement on the matter. [36492/18]
View answerAs the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
154. Deputy John Curran asked the Minister for Finance the status of the review of the local property tax announced earlier in 2018; and if he will make a statement on the matter. [36539/18]
View answerMy Department is currently finalising the review of the LPT in conjunction with the Departments of Public Expenditure and Reform, Housing, Planning and Local Government, the Taoiseach and the Revenue Commissioners.
155. Deputy John Curran asked the Minister for Finance if the 2009 cap which applied to banks that had transferred assets to NAMA restricting their use of deferred tax assets to 50% of their corporation tax and which was removed in 2014, will be reintroduced; and if he will make a statement on the matter. [36540/18]
View answerSection 396C of the Taxes Consolidation Act 1997 previously restricted the amount of losses, as incurred by a NAMA participating institution from its trading operations in prior years, which could be set off against trading profits in the current year. The relief was limited to a maximum of 50% of the trading profits for each accounting period. This restriction was removed in Finance Bill 2013 as it was considered to have outlasted its initial purpose. Due to the substantial holdings that the State had subsequently acquired in the banking sector (99.8% of AIB and 15% of Bank of Ireland at the time) it was deemed to be acting against the State’s interests. Section 396C was repealed to reduce the State’s role as a ‘backstop’ provider of capital and to improve the existing value of the State’s equity and debt investments.
Notwithstanding the losses carried forward it should be noted that the Irish banks do currently pay some Irish corporation tax, as the losses do not shelter profits made in all their corporate entities in Ireland. The banks are also contributing to the Exchequer through the financial institutions levy. To recognise the part that the banks played in the financial crisis, in 2013, the Government decided that the banking sector should make an annual contribution of approximately €150 million to the Exchequer for the period from 2014 to 2016. In Budget 2016, the payment of this levy was extended until 2021. The bank levy is expected to raise €750 million over those five years.
At Committee Stage of Finance Act 2017, I agreed that my officials would produce a report on the potential effect of limiting the provision of tax relief for losses carried forward for banks. This report has recently been provided to the Committee on Finance, Public Expenditure and Reform, and Taoiseach. The paper examines the potential re-introduction of the tax loss restriction for the NAMA-participating banks, among other options, and estimates that such a measure could potentially result in an annual Exchequer yield of approximately €111 million in respect of the remaining NAMA-participating banks, assuming no change to the bank levy.
The report also notes that a range of consequential impacts would have to be considered in connection which such a measure. A restriction targeted at some or all banks in Ireland could be expected to increase costs and/or reduce competition in the sector. This could have negative knock-on effects to the detriment of consumers, including mortgage holders, business borrowers and savers.
Such a change would have an impact on the capital position of the banks in which the State has a shareholding and the report estimates that an immediate reduction in value of the State’s shareholdings of in excess of €400 million could be expected to occur. It would also have the potential to damage the State’s credibility in the international markets, and this could have negative consequences for values achieved in future share sales.
These factors would need to be considered carefully in framing future policy with regard to relief for trading losses in the banking sector.
156. Deputy Pearse Doherty asked the Minister for Finance his plans for an increase in excise duty in budget 2019; and if he will make a statement on the matter. [36547/18]
View answerAs the Deputy will be aware, it is a longstanding practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
158. Deputy Richard Boyd Barrett asked the Minister for Finance the amount that would be raised annually by increasing the rate of stamp duty to 6%; and if he will make a statement on the matter. [36593/18]
View answerThe current rate of Stamp Duty on residential property is 1% on first €1 million of consideration and 2% on any excess. The current rate on non-residential property is 6% on the full consideration. It is therefore assumed that the Deputy is referring to residential property in his Question.
I am advised by Revenue that a Ready Reckoner is available on the Revenue Statistics webpage at:
https://www.revenue.ie/en/corporate/information-about-revenue/statistics/ready-reckoner/index.aspx.
This Ready Reckoner shows a wide range of detailed information, including changes to the Stamp Duty rate on residential property (page 18). While the Ready Reckoner does not show the specific costing requested by the Deputy, it can be estimated on a pro-rata or straight line basis with those displayed in the Ready Reckoner.
159. Deputy Richard Boyd Barrett asked the Minister for Finance the amount of revenue forgone each year by maintaining the help-to-buy scheme; and if he will make a statement on the matter. [36594/18]
View answerThe Help to Buy incentive (HTB) was introduced in January 2017 (backdated to July 2016) and is subject to a sunset clause which is scheduled to take effect on 31 December 2019.
I am advised by Revenue that statistics on HTB are available on the Revenue Statistics webpage at:
https://www.revenue.ie/en/corporate/documents/statistics/tax-expenditures/help-to-buy-stats.pdf.
These statistics, which are updated on a monthly basis (most recently at end July), provide a range of information in respect of the scheme, including the number of approved applications and the estimated total cost of approved HTB claims to date.
As of 31 July 2018, some 8,240 claims for HTB have been made, of which 7,658 are approved. The estimated total value of approved HTB claims to date is some €110.7 million, of which some €17.8 million represents retrospective claims (for the period 19 July to 31 December 2016) some €61.2 million represents claims made in respect of 2017 and some €31.7 million represents claims in respect of 2018.
As the Deputy may be aware, a cost benefit analysis of the incentive is being undertaken at the present time and I expect that it will be completed in the coming weeks.
160. Deputy Richard Boyd Barrett asked the Minister for Finance the amount of revenue that would be raised annually by implementing four new tax bands by amounts (details supplied); and if he will make a statement on the matter. [36595/18]
View answerIt is assumed that the Deputy's proposed tax rates and bands would be integrated into the current tax system together rather than in isolation.
On the above basis, I am advised by Revenue that the estimated yield to the Exchequer from the introduction of the suggested rates and bands would be in the order of €1.6 billion and €2.1 billion on a first year and full year basis, respectively.
These estimates were generated by reference to 2019 incomes, calculated on the basis of actual data for the year 2016, which is the latest year for which returns are available and adjusted as necessary for income, self-employment and interim employment trends.
However, these estimates do not take account of any changes in behavioural patterns that could arise as the result of such increases, including the increase in the marginal rates of tax.
161. Deputy Richard Boyd Barrett asked the Minister for Finance his plans for a site value tax; the estimated revenue that might be raised by this measure; and if he will make a statement on the matter. [36597/18]
View answerThe 2012 report of the Inter-departmental Group on the Design of a Local Property Tax (the "Thornhill Group") comprehensively examined the basis of assessment for the Local Property Tax (LPT), including both the taxable value of the property option and a site value tax (SVT). The report favoured the use of market value of residential properties as the basis of assessment and this recommendation was accepted by the Government.
The Thornhill Group concluded that the arguments for SVT were outweighed by the likely difficulties in ensuring acceptance by taxpayers, i.e., arriving at values that were evidence based, understandable and acceptable to the public in addition to complexities and uncertainties in the valuation effort necessary to put an SVT in place. In contrast, the Group considered that under a market value approach applied to housing, the market value of a residential property would be related to the characteristics of the building itself, the site on which it was located and the characteristics and amenities of the neighbourhood. There would be a relationship between the market value of a house and benefits to the owners in terms of enjoyment of the amenity value of the properties.
At the request of the Minister for Finance, the operation of the LPT was reviewed in 2015 by Dr. Thornhill. A number of submissions to the review favoured changing the basis of determination of LPT liabilities to site value, floor area or variations thereof. Dr. Thornhill considered these but remained of the view that market value is the most appropriate and equitable basis on which to determine LPT liabilities.
Both Commissions on Taxation in 1985 and 2009 favoured property taxation based on market value citing inter alia significant difficulties in communicating to home-owners and land-holders the nature of the taxation charge that is involved and the benefits that would accrue from that change.
At my request the Department of Finance is currently finalising a review of the LPT in conjunction with the Departments of Public Expenditure and Reform, Housing Planning and Local Government and the Taoiseach and the Revenue Commissioners. The review is looking in particular at the impact on LPT liabilities of property price developments and includes a consultation process to enable all interested parties and individuals to submit their views on the future of the LPT.
I have no plans to introduce a Site Value Tax.
162. Deputy Richard Boyd Barrett asked the Minister for Finance the amount of tax saved by financial institutions here due to their ability to use historical losses to reduce current liabilities; and if he will make a statement on the matter. [36600/18]
View answerI am informed by Revenue that on the basis of Corporation Tax returns filed for the year 2016, the estimated tax saved by all financial institutions, including insurance companies, due to their ability to use historic losses to reduce tax liabilities was in the region of €925 million. This includes the tax cost associated with capital allowances that are claimed as losses forward if not used in the first year of claim.
Loss relief is a long standing feature of the Irish Corporate Tax system and is relevant to all business sectors. It allows for losses incurred in the course of business to be taken into account when calculating a business’s tax liabilities. Loss relief is a standard feature of Corporation Tax systems in all OECD countries. It recognises the fact that a business cycle runs over several years and that it would be unbalanced to tax profits earned in one year and not allow relief for losses incurred in another.
Further information on trading losses carried forward in various sectors is published in the Revenue statistical report "Corporation Tax 2017 Payments and 2016 Returns", available on the Revenue website at https://www.revenue.ie/en/corporate/documents/research/ct-analysis-2018.pdf.
163. Deputy Richard Boyd Barrett asked the Minister for Finance the effective corporation tax rate in 2017; and if he will make a statement on the matter. [36601/18]
View answerI am advised by Revenue that a detailed paper on Corporation Tax statistics in respect of 2016 returns and 2017 payments is available on the Revenue website at https://www.revenue.ie/en/corporate/documents/research/ct-analysis-2018.pdf.
This paper shows that for the tax year 2016, the latest year available, the effective rate of Corporation Tax on aggregate net taxable profits, after taking account of various deductions, allowances, charges and reliefs was 10 per cent. Information for 2017 will be published in 2019 when Corporation Tax returns for the year have been analysed.
On the matter of the effective corporate tax rate paid by corporations in Ireland, the Deputy will be aware that there have been seemingly conflicting figures and methodologies used in reference to Ireland. Therefore in 2014, my Department prepared and presented a report for the Finance Committee to explain figures which are quoted and attributed to Ireland on this matter. This technical paper, co-authored by an independent academic, provides clarity on the matter and is available online via the following link: http://www.budget.gov.ie/Budgets/2015/Documents/Technical_Paper_Effective_Rates_Corporation_Tax_Ireland.pdf .
Based on data from the Central Statistics Office and Revenue, this technical paper highlighted that, from 2003, the effective corporate tax rates on Net Operating Surplus and Taxable Income averaged 10.9% and 10.7% respectively. While these percentages are lower than the 12.5% headline rate, this can be attributed to the availability of the small number of targeted tax measures that are available in Ireland that may lower the effective rate of corporation tax paid in Ireland.
Furthermore, the Comptroller and Auditor General’s (C&AG) Report Annual Report for 2016 highlighted that 79 of the top 100 companies paid an effective rate of 10% or more, and almost two-thirds paid in excess of 12%.
It is important to note that, of the companies which paid less than an effective rate of 10%, in most of these cases the relevant company was in receipt of foreign dividends for which double tax relief was available for taxes incurred in other jurisdictions in respect of that income. Therefore, when foreign taxes are factored in, the rate of tax was substantially higher.
In a number of cases, the effective corporate tax rate was also impacted by R&D tax credit claims. The R&D tax credit is one of the few reliefs we have which may lower the effective rate of corporate tax paid in Ireland. Some other countries have higher headline rates, supplemented by a high number of tax reliefs, which reduce the overall tax paid. In contrast, Ireland’s approach is transparent. We have a competitive headline rate of corporate tax applied to a broad base. Of the small number incentives we have, these are focused on the creation of additional employment and on areas of innovation.
Further work carried out by Revenue has identified that the effective rate of tax paid by companies in 2015 was provisionally 9.8%, which was a marginal increase on the 2014 rate of 9.7%. The 2012 and 2013 figures are 10.1%. Again, while these percentages are lower than the 12.5% headline rate, this can be attributed to the small number of targeted tax measures available in Ireland.
On the basis of this extensive analysis, I am satisfied that companies in Ireland are paying the appropriate rate of corporate tax on profits generated by those companies in Ireland.
164. Deputy Michael McGrath asked the Minister for Finance if it is possible to break down excise duty on alcohol based on final sale to the customer; the breakdown of excise duty on alcohol in each of the past three years by pubs, restaurants, hotels, off-licences and grocery outlets, and supermarkets; and if he will make a statement on the matter. [36603/18]
View answerI am advised by Revenue that a breakdown of the Excise Duty on alcohol, based on final sale to the customer in the requested categories, is not available. The available information is a breakdown by commodity (beer, cider, wine, spirits) and this is published at: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/excise/receipts-volume-and-price/excise-receipts-commodity.aspx
165. Deputy John Curran asked the Minister for Finance if he is satisfied that the lending limits imposed by the Central Bank on a credit union (details supplied) are fair and reasonable; if these lending limits allow this credit union to operate competitively; his views on the future viability of the credit union due to the very restrictive lending limits imposed by the Central Bank; and if he will make a statement on the matter. [36615/18]
View answerAs the Deputy is aware the Central Bank has statutory responsibility for the registration, regulation and supervision of credit unions in Ireland.
While it would not be appropriate to comment on a specific regulatory matter concerning a specific credit union, I have been advised by the Central Bank that, in accordance with its statutory responsibility, it regulates and supervises all credit unions with a view to the protection by each credit union of its members' funds and maintenance of financial stability and the well-being of credit unions. It is the responsibility of each credit union at all times to ensure compliance with legal and regulatory requirements. Where instances of failure to comply with regulatory requirements are identified the Central Bank uses appropriate regulatory, enforcement or other powers.
Regulatory directions, such as those imposing lending restrictions, are issued in the interest of the orderly and proper regulation of the business of a credit union with the purpose of ensuring that the credit union is provided with specific, proportionate, time-bound actions to address the specific issues identified.
The Central Bank works closely with all credit unions who have regulatory directions imposed to ensure that all outstanding supervisory issues are addressed by the board of the credit union to the satisfaction of the Central Bank.
