Tuesday, 2 July 2019

Questions (216, 217, 218, 219, 220)

Joan Burton

Question:

216. Deputy Joan Burton asked the Minister for Finance the estimated amount he expects to be raised by the various EII schemes in 2019 and 2020; the expected tax cost; the likely additional jobs that will be created, in tabular form; and if he will make a statement on the matter. [28285/19]

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Joan Burton

Question:

217. Deputy Joan Burton asked the Minister for Finance his views in relation to Part 16 of the Taxes Consolidation Act 1997, as amended, on whether the EII scheme offers reasonable value for money despite the poor take-up in previous years; and if he will make a statement on the matter. [28286/19]

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Joan Burton

Question:

218. Deputy Joan Burton asked the Minister for Finance if a rigorous value-for-money analysis was prepared in advance of the changes in relation to Part 16 of the Taxes Consolidation Act 1997, as amended, introduced in respect of EII schemes with effect from 1 January 2019; and if he will make a statement on the matter. [28287/19]

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Joan Burton

Question:

219. Deputy Joan Burton asked the Minister for Finance the further changes that may be required to make the scheme in relation to Part 16 of the Taxes Consolidation Act 1997, as amended, more effective at raising share capital, rather than debt, for investment; and if he will make a statement on the matter. [28288/19]

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Joan Burton

Question:

220. Deputy Joan Burton asked the Minister for Finance the estimated number by the Revenue Commissioners of additional jobs created by the EII scheme in each of the years 2012 to 2017; and if he will make a statement on the matter. [28289/19]

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Written answers (Question to Finance)

I propose to take Questions Nos. 216 to 220, inclusive, together.

I am informed by Revenue that it is not possible to estimate of the amount to be raised by the various EII schemes in 2019 and 2020 nor is it possible to provide a figure in respect of the likely tax cost in those years. Revenue will not have the relevant information until after the relief has been applied for. Furthermore, it is not possible to estimate the number of additional jobs likely to be created in the two years under the schemes.

However, the Exchequer costs and amounts of investment raised from the start of the incentive until 2017 are as follows:

Year

1st Tranche Exchequer Cost €m

2nd Tranche Exchequer Cost €m

Amount Invested €m

2017

18.6

N/A

62.1

2016

31

N/A

103.1

2015

28

N/A

93.4

2014

23.3

2

77.8

2013

17.3

2.9

57.6

2011/2012

15.7

3.2

52.2

A statistical report on the Employment and Investment Incentive (EII) is available on the Revenue website at: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/eii.aspx

In relation to value for money and as the Deputy may be aware, in 2018 I commissioned Indecon Economic Consultants to carry out a review which included an examination of the impact and cost effectiveness of EII (Chapter 5). The report is available at the following link: https://www.gov.ie/en/publication/10b64f-indecon-evaluation-of-eii-and-sure/.

The review found that the EII "should continue to be provided in order to facilitate funding for Irish based SMEs and start-ups".

The review also made a number of proposals for changes to the incentive to enhance its efficiency and effectiveness and, in Finance Act 2018, I brought forward a priority package of measures to address the main shortcomings identified with the scheme.

The changes made put in place an amended applications process incorporating a move to a largely self-certification model as well as a substantially revised, simplified and updated legislative text in Part 16 of the Taxes Consolidation Act 1997. In addition, they included the introduction of a new Start-up Capital Incentive to facilitate investment in very small enterprises. Finally, the operation of the EII and SURE schemes was extended for a further year to the end of 2021

The move to self-certification has brought EII in line with other similar tax reliefs. While Revenue will still offer some guidance where requested, it is now within the control of the company to determine their qualification under the incentive and avail of the relief as they deem appropriate.

Subject to further analysis which is currently being undertaken, it is possible that further legislative changes may be brought forward in the context of this year's Budget and Finance Bill process with the aim of ensuring that the EII schemes operate as intended in an efficient and effective manner. In this regard, the Deputy may wish to note that my Department recently carried out a public consultation process on tax incentives aimed at the SME sector across a number of tax heads. The EII schemes were included in that process.

With respect to the debt vs. equity nature and form of the investment, the Indecon report suggested that all shares would be new ordinary shares. However, consideration was given to the fact that investors would not necessarily want these new ordinary shares and would therefore not invest. As such, I decided that other forms of share capital could be allowable under the scheme. The scheme was amended to allow redeemable, cumulative, preference share capital, provided that, it is not possible to amend the terms of those shares, for example, through side agreements that would otherwise reduce the risk.

Finally Revenue has also advised me that it is not possible to identify the number of additional jobs created by the EII from 2012 to 2017. However, in its 2018 review, Indecon found strong overall growth in employment of firms who received EII.