Written Answers Nos. 101-125
101. Deputy Ged Nash asked the Minister for Finance if he will consider a clawback mechanism for employers availing of the temporary wage subsidy scheme, which subsequently laid off substantial numbers of their staff; and if he will make a statement on the matter. [11281/20]
View answerThe temporary wage subsidy scheme, TWSS, is an emergency measure to deal with the impact of the Covid-19 pandemic on the economy and is being extended until the end of August.
The TWSS provides a sum to employers to cover a portion of their wage bill in circumstances where the employer’s business has been negatively impacted by the restrictions that have had to be introduced to stop the spread of the COVID-19 virus.
The sum the employer receives is based on the employees who were on their payroll on 29 February 2020, the net salary such employees received in January and February 2020, as well as the extent to which the employer remains able to continue to discharge their legal obligation to pay their employees’ salaries. In this way it is intended to maintain the net pay of as many employees as possible at this time and to preserve the link between the employee and employer insofar as is possible, as well as firm viability, through this period. Maintenance of the employment relationship for a specific period of time is not one of the criteria for eligibility for the TWSS. I have no plans to change that position.
102. Deputy Ged Nash asked the Minister for Finance if his attention has been drawn to a survey by an organisation (details supplied) that states that 49% of companies surveyed stated their intention to continue to pay bonuses in 2020; his views on whether companies that avail of State aid such as the temporary wage subsidy scheme should postpone the payment of bonuses; and if he will make a statement on the matter. [11282/20]
View answerThe Temporary Wage Subsidy Scheme (TWSS) is provided for in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020. In the context of the need for the immediate implementation of the TWSS, the scheme necessarily had to build on data returned to Revenue through its real-time PAYE system. The key conditions of the scheme, as prescribed in the underlying law, are that –
- the business is suffering significant negative economic impact due to the pandemic,
- the employees were on the payroll at 29 February 2020, and
- the employer had fulfilled its PAYE reporting obligations for February 2020 before, in general, 15 March 2020, but extended recently to 1 April 2020.
The latter two conditions were particularly designed with a view to preventing abuse of the scheme.
The amount of the wage subsidy for each employee is calculated based on the average net weekly pay of the employee reported to Revenue by the employer for January and February 2020. Bonuses, commissions and other once off payments are taken into account in the calculation, where these were included as part of gross pay in the January and February 2020 payroll submissions.
In accordance with the TWSS legislation, no wage subsidy amount is payable for any employees with an average net weekly pay which exceeds €960 a week. Moreover, for the duration of the scheme, any payment of wages by an employer to an employee at a level higher than the average net weekly pay, including payment of bonuses, could result in payments exceeding various threshold limits set out in the legislation and in the determinations of rates of subsidy amount made by me as Minister for Finance. This would lead to a tapering of the subsidy amount payable which, depending on the circumstances, could mean that no wage subsidy at all may be due.
However, the question of an individual’s entitlements in an employment context, and the question of what wages, including bonuses, an employer may or may not be in a position to pay such an employee in the light of the impact of the Covid-19 pandemic on the employer’s business, are matters that are outside the remit of the TWSS. The scheme has no role in relation to the employer/employee relationship in so far as the terms, conditions and entitlements of the employment are concerned.
103. Deputy Steven Matthews asked the Minister for Finance if his attention has been drawn to the case of credit unions that do not qualify for the temporary wage subsidy scheme in view of the fact their turnover has not dropped below 25% as saving deposits have largely remained constant throughout the Covid-19 crisis (details supplied); and if he has considered metrics to measure business performance other than turnover with regard to the scheme. [11287/20]
View answerThe Temporary Wage Subsidy Scheme (TWSS) is provided for in section 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020. Of necessity, the underlying legislation and the scheme itself were developed quickly, having regard to the objective of getting financial assistance to employers and employees, where businesses have been seriously affected by the pandemic and the necessary restrictions introduced to fight the spread of the Covid-19 virus.
The TWSS applies where the employer demonstrates to Revenue’s satisfaction that, by reason of Covid-19 and the resultant disruption that is being caused to the conduct of business commerce, there will occur in the period 14 March 2020 to 30 June 2020 at least a 25 per cent reduction in the turnover of the employer’s business or in customer orders being received by the employer. Revenue published detailed guidance on its website relating to employer eligibility and supporting proofs for the scheme. https://www.revenue.ie/en/corporate/communications/documents/guidance-on-employer-eligibility-and-supporting-proofs.pdf .
I have been advised by Revenue that, in its administration of the TWSS, the key focus at employer level is on satisfaction that the employer will in fact suffer significant negative economic disruption due to the COVID-19 pandemic. In instances where application of the “turnover” and “customer orders” tests referred to above do not adequately demonstrate this, an alternative “reasonable basis” should be applied. However, the starting position in such cases is that neither the turnover test nor the reduction in customer orders test is capable of being applied to the business in question. It is not sufficient that the business does not meet either of these tests. It must be the case that neither of those tests are capable of being applied to the business in question before an alternative basis for assessing eligibility is used.
There is no specific exclusion of financial institutions from eligibility to participate in the TWSS. However, given the possibility that different economic models may be used, each Credit Union considering its eligibility for participation in the scheme can approach Revenue directly to outline its concerns and queries on eligibility.
104. Deputy Cian O'Callaghan asked the Minister for Finance the amount his Department spent on social media monitoring in 2018 and 2019; and if he will make a statement on the matter. [11293/20]
View answerI wish to inform the Deputy that my Department has no record of spending on social media monitoring during the years 2018 and 2019.
105. Deputy Cian O'Callaghan asked the Minister for Finance further to Parliamentary Question No. 83 of 3 June 2020, if the Central Bank will provide the human rights and equality issues assessment that was prepared as part of its strategic planning process; and if he will make a statement on the matter. [11300/20]
View answerThe Central Bank is happy to share its assessment, which my office will send to the Deputy.
106. Deputy Dara Calleary asked the Minister for Finance if he is considering further Revenue Commissioners extensions, for example, the September deadline for corporation tax returns and the mid-November deadline for personal income tax returns in view of the fact that many professional firms have limited capacity owing to Covid-19 restrictions; and if he will make a statement on the matter. [11315/20]
View answerThe flexible approach taken by Revenue to debt collection and enforcement activity has provided vital liquidity support to businesses during the COVID-19 crisis.
In this context, Revenue has emphasised the importance of businesses continuing to file tax returns promptly, even in circumstances where they cannot pay the associated liabilities. Revenue has also acknowledged that some businesses may have difficulty in completing accurate returns due to the pandemic and in such circumstances advises that they submit a best estimate, which can be amended at a later date if necessary. This is important to enable both Revenue and my Department to have a clear picture of the portfolio of emerging debt, particularly debt that may be included in the proposed tax ‘debt warehousing’ arrangements that will be provided for in legislation later this year. In relation to ‘debt warehousing’, it will be a condition of that scheme that tax returns are kept up to date.
It is too early to make decisions regarding tax filing deadlines that fall due later in the year as it is not possible to predict the progress of public health measures and their likely impact on professional services. However, I have every confidence that Revenue will make appropriate decisions regarding these deadlines in due course and will continue to support all businesses affected by the pandemic to the greatest extent possible, as has been the case to date.
As the Deputy will be aware, in accordance with section 101 of the Ministers and Secretaries (Amendment) Act 2011, the Revenue Commissioners are independent in the performance of their functions under, or for the purpose of, the laws governing the tax code.
109. Deputy Charlie McConalogue asked the Minister for Finance if the situation in respect of the temporary wage subsidy scheme as outlined in correspondence (details supplied) will be clarified; and if he will make a statement on the matter. [11402/20]
View answerSection 28 of the Emergency Measures in the Public Interest (Covid-19) Act 2020 underpins the Temporary Wage Subsidy Scheme (TWSS). It makes provision for the Minister for Finance to determine the amount of the temporary wage subsidy, with the consent of the Minister for Employment Affairs and Social Protection, given with the concurrence of the Minister for Public Expenditure and Reform, and different amounts of temporary wage subsidies may be so determined in relation to different classes of employee.
On 15 April 2020, I announced further updates to the TWSS. Included in the updates were measures to increase the wage subsidy for certain lower paid employees. In effect, for those employees with previous net pay of less than €586 per week, the amount of the temporary wage subsidy shall not exceed €410 per week in accordance with the following principles:
- an 85% subsidy shall be payable in the case of employees whose average net weekly pay does not exceed €412; and
- a flat rate subsidy of up to €350 shall be payable in the case of employees whose average net weekly pay is more than €412 but not more than €500.
The amount of the wage subsidy for each employee is calculated based on the Average Revenue Net Weekly Pay (ARNWP) reported by the employer to Revenue for January and February 2020. In the case the Deputy refers to, where an eligible employee returns to work under the wage subsidy scheme and the employee’s ARNWP is between €412 and €500, a flat rate subsidy of up to €350 shall be payable. However, tapering or restriction of the subsidy shall apply to cases where the gross pay paid by the employer, and reported on their payroll submission, plus the wage subsidy amount exceeds the average revenue net weekly pay. Thus, whether the employer has the subsidy tapered to zero is dependent on the level of gross pay paid in excess of the ARNWP.
By way of an example, where an employee has an average revenue net weekly pay of €480 the full wage subsidy of €350 is payable up to a point where the employer tops up gross pay to €130, in effect staying within the ARNWP limit. If the employer pays gross pay of €230 in a particular week, then the subsidy amount for that week is reduced proportionately to €250 to ensure the ARNWP does not exceed €480. However if the employer paid the employee €500 gross in one week, the ARNWP limit has been exceeded and thus, no subsidy is due.
110. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised from a reduction in the thresholds for capital acquisitions tax on inheritance and gifts to €280,000 for group A, €30,000 for group B and €15,000 for group C, respectively; the estimated revenue that would be raised at these new thresholds from increasing the rate of the tax applied at these thresholds at percentage rates (details supplied), in tabular form; and if he will make a statement on the matter. [11403/20]
View answerI am advised by Revenue that the costs of various changes to Capital Acquisition Tax (CAT) thresholds and rates are published on pages 15-16 of the Revenue Ready Reckoner which is available at link: https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf.
While the exact changes proposed by the Deputy are not all included, they can be extrapolated on a straight line or pro-rata basis from those shown.
111. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised from an increase in capital gains tax at each percentage point from 33% to 40%, respectively; the estimated additional revenue that would be raised at each of these rates by ending the three-year capital gains tax exemption for real estate investment trusts, in tabular form; and if he will make a statement on the matter. [11404/20]
View answerI am advised by Revenue that the estimated yield from increasing the rate of Capital Gains Tax (CGT) is published on page 13 of the Revenue Ready Reckoner, available at link; https://www.revenue.ie/en/corporate/information-about-revenue/statistics/ready-reckoner/index.aspx. While the exact changes sought by the Deputy are not provided, they can be estimated on a straight-line or pro-rata basis. It should be noted that these estimates are based upon an assumption that there would be no behavioural impact arising from these changes.
In relation to REITs, Finance Act 2013 introduced the regime for the operation of Real Estate Investment Trusts (REITs) 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.
While property rental income and gains are exempt from tax within the REIT, they are taxed instead at the investor level when distributed. Dividend Withholding Tax (DWT) must be applied to all distributions from REITs, other than those distributed to certain limited classes of investors such as pensions and charities as they are more generally exempt from tax. The distributions are subject to a DWT at 25%.
There is no 3 year exemption from Capital Gains Tax within REITs - rather, there is a general exemption subject to specific requirements including distribution obligations and anti-avoidance provisions. The Deputy may be referring to an anti-avoidance provision designed to prevent REITs being used as short-term development vehicles rather than for long-term rental property. It provides that a REIT is subject to CGT on the disposal of a property asset if:
- it acquires an asset that is used for the purposes of its property rental business, and
- following that acquisition the asset is developed to the extent that the development cost exceeds 30 per cent of the market value of the asset at the time the development commenced, and
- the asset is then disposed of within 3 years of completion of the development.
It should also be noted that REITs are subject to CGT in respect of the disposal of any assets which are not held for the purposes of the property rental business.
It is not possible to provide the information sought by the Deputy as the future value and volume of REIT disposals are unknown. Further, Revenue has confirmed that due to the small number of REITs involved, and its obligation to maintain the confidentiality of taxpayer information, specific quantitative information in relation to these entities cannot be provided.
113. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised from an increase in the dividend withholding tax on real estate investment funds, REITs, and Irish real estate funds, IREFs, to 40%; and if he will make a statement on the matter. [11433/20]
View answerThe regime for the operation of Real Estate Investment Trusts (REITs) in Ireland was introduced in Finance Act 2013. The framework for REITs is designed to facilitate collective investment in rental property by removing a double layer of taxation which would otherwise apply on property investment through a corporate vehicle. The property rental income and gains are exempt from tax within the REIT, they are taxed instead at the investor level when distributed.
Dividend Withholding Tax (DWT) must be applied to all distributions from REITs, other than those distributed to certain limited classes of investors such as pensions and charities as they are more generally exempt from tax. The distributions are subject to a DWT at 25% from 1 January 2020, prior to this date the rate applicable was 20%. Information in respect of dividends from shares in REITs is not separately identified from other shares. Part 25A of the Taxes Consolidation Act 1997 (“TCA 1997”) requires that 85% of all property income profits are distributed annually to investors. Any income or gains arising to the REIT which is not in respect of the REITs property rental business is subject to corporation tax.
Finance Act 2016 introduced the Irish Real Estate Funds (IREFs) regime. The regime provides that the profits arising to an Irish fund from Irish property remain within the charge to Irish tax. An IREF is an investment undertaking where 25% or more of the value of the assets is derived from real estate assets in the State. Generally, where a unit holder receives value from the IREF an IREF withholding tax of 20% will apply.
Foreign investors from tax treaty resident countries may be able to reclaim some part of any DWT on REIT distributions (currently 25%) or IREF withholding tax (currently 20%) if the relevant tax treaty allows for this. The taxation of distributions varies from treaty to treaty, but Ireland commonly retains the right to approximately 15% tax on gross dividends paid from that state.
Irish resident REIT investors are required to pay tax at their marginal rate of taxation on any distributions they receive on a self-assessment basis, with a credit available for any DWT deducted. Irish resident IREF investors may be subject to exit tax at a rate of 41% which is deducted at source by the IREF.
Given the interaction with tax treaties, and because information is not available in relation to potential future REIT and IREF distributions to investors, an accurate estimate of any potential revenue from an increase in the withholding tax rates cannot be made.
114. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised from a minimum effective rate of corporation tax of 12.5%; and if he will make a statement on the matter. [11434/20]
View answerThe Deputy will be aware that companies in Ireland are mainly taxed at the standard corporation tax rate of 12.5 per cent. The higher corporation tax rate of 25 per cent applies to certain income of companies, mainly non-trading income. I am aware of different figures and methodologies being used to calculate effective tax rates paid by companies in Ireland. While some of these percentages are lower than the 12.5 per cent headline rate, this can be attributed to the availability of a small number of tax reliefs, such as the Research and Development Tax Credit, available in Ireland that may lower the effective rate of corporation tax paid.
An analysis by Revenue of corporation tax paid by companies in 2018 estimates that the effective rate of tax paid by all companies in Ireland in that year, after taking account of tax reliefs, was 10.6 per cent, and 11.3 per cent and 10.8 per cent respectively for the top 10 and top 100 companies. The overall rate of 10.6 per cent represents a marginal increase on the rate of 10.2 per cent for 2017.
I am advised by Revenue that it is not possible to estimate the amount of tax revenue that might be generated from introducing a minimum effective tax rate of 12.5 per cent without consideration of the design features underpinning the proposals. Examination currently underway by the OECD, as part of the ongoing BEPS (Base Erosion and Profit Shifting) project, of a number of potential policy approaches to international tax reform proposals, including minimum effective rates, demonstrate the complexity and challenges of designing and implementing such reform proposals. OECD analysis suggests that there can be significantly different policy outcomes depending on the design approaches taken which in turn has implications for possible revenue yield. Furthermore, yield predictions would be also impacted by the consequential behaviour of companies, particularly in relation to their decisions to locate and invest in Ireland, which would become clearer more in the medium to longer term than in the immediate timeframe.
115. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised from an increase to 35% in the minimum effective tax rate of those earning more than €200,000, €300,000 and €400,000 per annum, respectively; and if he will make a statement on the matter. [11435/20]
View answerI assume the Deputy is referring to the High-Income Individual’s Restriction. The restriction is designed to ensure that individuals with an adjusted income level of €400,000 or more (where the full restriction applies) pay an effective rate of Income Tax of approximately 30%. Where adjusted income is less than €400,000, a tapering approach ensures that there is a graduated application of the restriction, with the effective rate of Income Tax increasing.
A comprehensive analysis of the restriction is published on an annual basis. These reports are available on Revenue’s website at the link: http://www.revenue.ie/en/corporate/information-about-revenue/research/statistical-reports/high-income-earners-reports.aspx .
The latest full year for which information is available is 2017. I am advised by Revenue that in that year the average effective rate of income tax, for cases with income in excess of €325,000 per year to which the restriction applies, was already greater than 35%. The yield from increasing the effective rate by 5% (from 30% to 35%) for those earning in excess of €200,000, but less than €325,000, is tentatively estimated to be in the order of €1.5m.
116. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised by abolishing the special assignee relief programme; and if he will make a statement on the matter. [11436/20]
View answerThe Special Assignee Relief Programme (SARP) is an income tax incentive designed to help reduce the cost to employers of assigning skilled individuals in their companies from abroad, to take up positions in the Irish-based operations of their employer or an associated company, thereby facilitating the creation of jobs and the development and expansion of businesses in Ireland.
In Finance Bill 2018, I re-imposed an upper salary ceiling of €1 million on the relief with effect of 1 January 2019 for new entrants and for existing beneficiaries of the programme from 1 January 2020.
Last year, I commissioned an independent review of SARP. The report of this review (published on Budget day 2019) confirmed that there is a strong policy rationale for the existence and continuation of the relief.
Revenue advise me that it is not possible to estimate accurately the cost of the SARP scheme, in its present form, up to 31 December 2022. The reason for this is that there are currently no data available that would enable such calculations to be made.
While abolishing these SARP related costs can be viewed as a saving to the Exchequer, likely losses resulting from lower employment levels (and related tax receipts) and other indirect effects within the activities that are supported by the Programme would also need to be factored into the equation.
The following table sets out the annual cost of the Special Assignee Relief Programme (SARP) for 2012 to 2017 (the most recent year for which data are available):
|
Year |
€m |
|
2012 |
0.1 |
|
2013 |
1.9 |
|
2014 |
5.9 |
|
2015 |
9.5 |
|
2016 |
18.1 |
|
2017 |
28.1 |
Further information can be found at the following link:
https://www.revenue.ie/en/corporate/documents/research/sarp-report-2017.pdf .
117. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be accrued from a wealth tax for the wealthiest 1%, 2.5% and 5% at a rate of 0.5%, 1%, 2% and 2.5%, respectively; and if he will make a statement on the matter. [11438/20]
View answerIn order to estimate the potential revenue from a wealth tax, it is necessary to identify the wealth held by individuals. As there is currently no such wealth tax in operation in Ireland, the Department understands that the Revenue Commissioners have no basis or requirement to compile the data needed to produce estimates in relation to a potential wealth tax. Although an individual's assets and liabilities are declared to the Revenue in a number of specific circumstances (for example, after a death), this information is not a complete measure of assets and liabilities in the State, nor is it recorded in a manner that would allow analysis of the implications of an overarching wealth based tax.
In 2013 the Central Statistics Office conducted the first comprehensive survey of household wealth in Ireland (the Household Finance and Consumption Survey (HFCS)). The survey provides information on the ownership and values of different types of assets and liabilities along with more general information on income, employment and household composition.
During 2016, my Department, jointly with the Economic and Social Research Institute (ESRI), conducted a research project into the distribution of wealth in Ireland and the potential implications of a wealth tax using the HFCS. The research formed part of an on-going joint-research programme with the ESRI on the Macro-Economy and Taxation. The research paper, available on the ESRI website (https://www.esri.ie/news/scenarios-and-distributional-implications-of-a-household-wealth-tax-in-ireland), presented results on the composition of wealth across both the wealth and income distributions in Ireland. A number of wealth tax scenarios were then applied to the Irish data (wealth tax regimes from other jurisdictions and hypothetical scenarios). In each case, the associated tax bases and revenue yields, the number of liable households across the income distribution, and the characteristics of the households affected are outlined. While the scenarios do not fully capture the parameters outlined in his question the Deputy may find them informative.
In order to estimate the yield from a tax with the precise parameters outlined in the Deputy's question, it would be necessary to seek the agreement of the CSO to revisit its original survey data for this specified purpose. This would be a significant undertaking that would take considerable time and resources to complete. It should also be noted that the HFCS does not include specific data on the global assets for those domiciled or ordinarily resident and the domestic assets for those resident for tax purposes. As such, any estimate on the yield obtained from HFCS data would not fully capture the parameters outlined in the Deputy's question. It is therefore not possible for me to provide the revenue estimate sought in this PQ.
118. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be accrued from discontinuing the remittance basis of taxation for income tax and capital gains tax; and if he will make a statement on the matter. [11440/20]
View answer119. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would accrue by supplementing the existing 183 and 280-day test for determining the tax residence of a person with additional criteria relating to a permanent home and his or her centre of vital interests; and if he will make a statement on the matter. [11449/20]
View answerI propose to take Questions Nos. 118 and 119 together.
I am advised by Revenue that an individual’s liability to Irish income tax is determined by reference to the source of his or her income and his or her Irish tax residence, ordinary residence and domicile status for a particular year.
An individual will be considered tax resident in the State if he or she is present in the State for:
- 183 days or more in a tax year; or
- 280 days or more in a tax year and the preceding tax year when taken together, with a minimum of 30 days in each year.
Once an individual has been tax resident in the State for three tax years, he or she will also be considered ordinarily resident from the fourth year.
Domicile is a complex legal concept and is not defined in tax legislation. This concept is a much more permanent one than that of residence. Every person must have a domicile and a person can only have one domicile at any particular time. An individual is born with a domicile of origin, usually the domicile of his or her father but it is possible for an individual to acquire a domicile of choice.
An Irish resident and domiciled individual is taxable on his or her worldwide income. Generally, non-residents are only taxable in respect of income from Irish sources. However, individuals who are not resident in the State, but who are ordinarily resident in the State, may also be liable to Irish income tax in respect of certain non-Irish sources. This is subject to any relief being provided by the terms of a relevant Double Taxation Agreement.
An Irish resident but non-domiciled individual is liable to Irish income tax on his or her Irish source income and foreign income to the extent that it is remitted to the State.
An individual who is not resident in the State, but who is ordinarily resident and not domiciled in the State, will be liable to Irish tax on his or her Irish income and foreign income to the extent it is remitted. However, income from an employment, all the duties of which are performed outside the State is not liable to Irish income tax, even if it remitted to the State.
An individual who is both not resident and not ordinarily resident in the State is liable to Irish income tax on his or her Irish source income only. This applies regardless of his or her domicile status.
As regards the Deputy’s specific question set out in question number 11449/20, the matter is quite complex but the following sets out a summary of the likely position.
An individual who is tax resident under either the 183 or 280 day test and who is also domiciled in the State is chargeable to Irish tax on his or her worldwide income and capital gains. This is subject to any provisions of a relevant Double Taxation Agreement. Thus, an augmentation of the residence rules would not yield any additional taxes on the basis that such individuals already have an unlimited liability to tax in the State.
An individual who is not tax resident under either the 183 or 280 day test and who is ordinarily resident and domiciled in the State will be taxable on their worldwide income with exceptions in relation to certain foreign source income. This is to ensure that, as far as possible, only sources of income for which a taxing right has been allocated to the State under the terms of a Double Taxation Agreement are within the charge to Irish tax. To the extent that such income is not within the charge to Irish tax, there is no requirement to report such amounts to Revenue. Thus, there is no way of quantifying any additional tax which might accrue to the State should the statutory residence tests be augmented as suggested by the Deputy. Even if such an augmentation were to be given legislative effect, the individuals affected are likely to be tax resident elsewhere and there is no guarantee that the State would be allocated a taxing right on such foreign sources of income. This could mean that no additional taxes might accrue to the Exchequer.
Non-domiciled individuals are subject to tax on what is known as the remittance basis of taxation. This means that they are taxable on Irish sourced income and on foreign sourced income to the extent that it is remitted to the State. A legislative change to the tax residence rules will not change the basis of taxation for such individuals and, thus, no additional taxes would accrue to the Exchequer. This is due to the fact that the charge to tax in such cases is driven by the individuals’ non-domicile status rather than their domestic residence position.
In relation to the Deputy’s question regarding the abolition of the remittances basis of taxation (question number 11440/20), it is not possible to provide an estimate of the revenue that would be accrued if this treatment discontinued, as there is no statutory obligation on those availing of the remittance basis of taxation to make an annual return of his or her un-remitted income and gains. It is also important to bear in mind that if the remittance basis of taxation ceased, the State may not have an automatic taxing right on the sources of unremitted income and gains in all cases. The provisions of any relevant Double Taxation Agreement in place between the State and either the source state or state of residence of the taxpayer would determine any such taxing right.
120. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised from a reinstatement of an 80% windfall tax on lands rezoned for housing purposes; and if he will make a statement on the matter. [11452/20]
View answerI assume the Deputy is referring to the 80% Windfall Tax which applied to certain disposals of land from 30 October 2009 to 31 December 2014.
The National Asset Management Agency Act 2009 amended the Taxes Consolidation Act 1997 by providing for an 80% windfall tax on profits or gains arising from disposals of development land, to the extent that those gains were attributable to a relevant planning decision. Profits or gains from these activities that were not attributable to a relevant planning decision were taxed in the normal way. Section 31 of Finance Act 2014 repealed the 80% tax rate on these profits or gains with effect from 1 January 2015. Such sales now attract the 33% rate of Capital Gains Tax.
I am advised by Revenue that there is no basis to provide an estimate of the yield that would arise to the Exchequer from the reintroduction of this tax. Additionally, based on information provided in Income Tax returns and Corporation Tax returns for the years 2010 to 2014, there is no record of any such profits or gains having been returned when the tax was in force.
The Deputy may be interested to know that, at the time, the policy rationale behind the introduction of windfall gains was primarily to discourage overheating of the property market by way of speculative transactions involving rezoned land rather than as a revenue raising measure.
121. Deputy Ged Nash asked the Minister for Finance the estimated revenue that would be raised from a reintroduction of the second home levy at a rate of €250, €500, €750 and €1,000, respectively; and if he will make a statement on the matter. [11462/20]
View answerI am informed by Revenue that the Ready Reckoner, available on its website at link https://www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf shows on page 26, the estimated amounts that could be raised by a levy on non-principal private residences (NPPR). While the rates proposed by the Deputy are not provided, they can be estimated on a straight-line or pro-rata basis from those shown. These figures are based on NPPRs identified in Local Property Tax (LPT) returns, rather than those from the NPPR charge previously administered by Local Authorities.
122. Deputy Ged Nash asked the Minister for Finance the revenue that would be raised from a levy on empty home properties at a rate of €200, €350 and €500, respectively; and if he will make a statement on the matter. [11463/20]
View answerI am informed by Revenue that it has no information on which properties are empty and consequently cannot estimate the potential yield from a levy on empty homes.
Regarding a vacant property tax more generally, an independent report on this topic commissioned by my Department was laid before Dáil Éireann on 18th September 2018 in accordance with the provisions of section 86 of Finance Act 2017. The independent Indecon Consultants report on the Taxation of Vacant Residential Property presented a detailed evidence-based assessment of vacancy rates in areas in which the demand for housing is most acute. This assessment suggests that the vacancy rate in these areas is significantly lower than the national average and has fallen in recent years.
Indecon Consultants did not recommend the introduction of a residential vacant property tax, as they did not believe it would be an effective response to deal with housing shortages. Indecon’s view was that the very low vacancy rates in the areas of greatest demand for housing, particularly in terms of medium-term vacancy, indicated that the potential for a vacant property tax to increase housing supply was very limited and could represent a distraction from the need to significantly accelerate the building of new social housing, affordable housing and the facilitation of other housing supply.
123. Deputy Ged Nash asked the Minister for Finance the revenue that would be raised from a new site value tax on underdeveloped land at €500, €1,000 and €2,500 per hectare, respectively; and if he will make a statement on the matter. [11464/20]
View answerMy Department does not hold information in relation to land that would enable it to make estimations of revenue as sought in the Deputy's question.
124. Deputy Ged Nash asked the Minister for Finance the revenue that would be raised by making all discretionary tax reliefs available only at the standard 20% rate; and if he will make a statement on the matter. [11465/20]
View answerI am advised by Revenue that the estimated yields from standard-rating discretionary tax reliefs currently available at the marginal rate are as shown in the following table. These yields are based on 2017 data, other than the estimate on the carry forward of excess reliefs under the High-Income Earners Restriction, where 2016 is the latest available year. The estimates are tentative and do not account for possible alterations in taxpayer behaviour.
|
Reliefs and Expenditures |
Full Year Yield (€m) |
|
Allowance for Seafarers |
0.1 |
|
Covenants |
0.5 |
|
Dispositions such as Maintenance Payments |
6 |
|
Donations to Approved Sporting Bodies |
0.3 |
|
Employing a Carer |
3 |
|
Health Expenses (Nursing Homes) |
7 |
|
Carry forward of excess relief under the High-Income Earners Restriction |
46 |
|
Employee Pension Contribution |
381 |
|
Rental Deduction for Leasing of Farm Land |
5 |
|
Relief for expenditure on significant buildings and gardens |
0.9 |
|
Stock Relief (General) (S666 Taxes Consolidation Act 1997) |
2 |
|
Stock Relief (for Young Trained Farmers) (S667B Taxes Consolidation Act 1997) |
0.6 |
|
Stock Relief (for Registered Farm Partnerships) (S667C Taxes Consolidation Act 1997) |
0.2 |
|
Permanent Health Benefit Premiums |
1.8 |
|
Foreign Earnings Deduction |
1.9 |
|
Start-up Relief for Entrepreneurs |
0.8 |
|
Donations to Charities and Approved Bodies |
12 |
Further details on the costs of tax reliefs and expenditures, which may be of interest to the Deputy, are published on Revenue’s website at link: https://www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/index.aspx .
125. Deputy Ged Nash asked the Minister for Finance the revenue that would be raised from an insurance windfall tax on the profits of insurance companies levied at a rate at each percentage point from 1% to 5%, respectively; and if he will make a statement on the matter. [11466/20]
View answerIt is not possible to provide estimated revenue yields for the policy measure proposed by the Deputy as the system of sectoral classification of businesses by NACE code does not provide sufficient accuracy for the specific profits on insurance companies to be separately identified from tax returns, and therefore for a robust estimate to be made.
Notwithstanding this, for the reasons set out below I do not believe the introduction of an insurance windfall tax on the profits of insurance companies, as suggested by the Deputy, would be appropriate.
Ireland’s corporation tax regime is a core part of our economic policy mix and is a long-standing anchor of our offering on foreign direct investment. The 12.5% rate, which applies to a broad base, is internationally competitive and is notable for its long term stability. Certainty, transparency and a commitment to open engagement with stakeholders are cornerstones of the corporate tax regime.
The proposed introduction of a windfall tax on the profits of insurance companies would not be consistent with our long-standing commitment to a sustainable and stable corporation tax system. It should also be noted that State aid implications would need to be considered when proposing any change which would provide a varied rate of tax to any targeted cohort of taxpayers.
Furthermore, it is my view that any decision taken on taxing the profits of an important sector of the economy, such as the insurance sector, must be considered in the context of the wider impact that it could have on the economy and consumers. In this respect, I believe that such a measure could be counterproductive as it could lead to increases in the cost of premiums for individuals and businesses as it is likely that the cost of the tax would be passed onto customers. In addition, such a measure could act as a barrier to potential new entrants in the market, thereby reducing competition in the market.
However, notwithstanding the above, I believe that insurers need to do more for their customers, particularly in the context of the considerable profits announced earlier this year. I believe that they should respond to the important reforms currently under way and that they should reduce premiums accordingly and widen their risk horizons for certain sectors of the economy such as the leisure, tourism and not-for-profit sectors. In that respect, the continued implementation of the recommendations of the Cost of Insurance Working Group’s two reports remain very relevant as a means to increase both insurance affordability and availability. Of particular importance is the work of the Personal Injuries Guidelines Committee, which was formally established in April and is due to present its draft guidelines to the Judicial Council by the end of October. I expect that more consistent award levels for personal injuries will help to reduce legal costs over time as there will be less incentive to litigate. In addition, I believe that insurers recognise the need to reflect any savings that result from a reduction in award levels in lower prices and a broader risk appetite.
