Tuesday, 27 Jul 2021

Written Answers Nos. 361-377

Tax Code

Questions (361)

Gerald Nash

Question:

361. Deputy Ged Nash asked the Minister for Finance the estimated additional revenue that would be raised from an increase in the rate of stamp duty to apply in circumstances in which a person purchases ten or more houses within a 12 month period from 10% to 17% respectively in tabular form; the estimated additional revenue that would be raised if these respective rates applied to both apartments and in cases in which properties are renting to local authorities, that is, removal of exception; and if he will make a statement on the matter. [39924/21]

Written answers

Minister for Finance

As the Deputy is aware the purpose of the 10% stamp duty charge on the multiple purchase of houses is to disincentivise such purchases with a number of limited exceptions for apartments and for social and affordable housing purposes. This measure therefore was introduced to influence behaviour rather than as a revenue raising measure. At the time of its introduction Revenue was unable to provide an assessment of the additional monies it would raise.

Consequently in response to the Deputy's question, Revenue has indicated that they are not able to provide the information he is seeking in circumstances where the stamp duty rate for purchases of 10 or more houses within a 12 month period is increased from 10% to 17%. Neither can they provide data in relation to a situation where the 10% and 17% rates are applied to both apartments and to situations where properties are being rented to local authorities.

Over time with the collection of revenue from this stamp duty charge, it is probable that Revenue will be able to make a better assessment of such matters.

Question No. 362 answered with Question No. 319.

Question No. 363 answered with Question No. 319.

Tax Code

Questions (364)

Gerald Nash

Question:

364. Deputy Ged Nash asked the Minister for Finance the estimated additional yield from increasing the effective rate to 40% for all those earning in excess of €200,000; and if he will make a statement on the matter. [39927/21]

Written answers

Minister for Finance

I am advised by Revenue that in 2018 (the most recent year for which tax returns are filed and the data processed) more than 50% of those taxpayers with a taxable income in excess of €200,000 had an effective rate of 40% or higher in relation to their liability to income tax, including USC. The estimated yield of increasing the effective rate to at least 40% for the entire cohort is approximately €100m.

Financial Services

Questions (365)

Gerald Nash

Question:

365. Deputy Ged Nash asked the Minister for Finance the cost of regulation of the financial industry by the Central Bank for 2019 and 2020 respectively; the amount of subvention provided by the Central Bank for both years; the estimated savings that would accrue to the Exchequer from moving the entire cost of regulation of the financial sector onto the industry; and if he will make a statement on the matter. [39928/21]

Written answers

Minister for Finance

As the Deputy may be aware the Central Bank disclose the total cost of Financial Regulation (Net Annual Funding Requirement or nAFR) in the Central Bank Annual Report each year.

The most recent report (see link below) includes details of the 2019 and 2020 cost of Financial Regulation which are as follows:

Year	Cost of Regulation	Income funded from Industry	Subvention from Central Bank
2019	€204.5m	€160.0m	€44.4m
2020	€212.7m	€174.4m	€38.3m

www.centralbank.ie/docs/default-source/publications/corporate-reports/annual-reports/annual-report-2020-and-annual-performance-statement-2020-2021.pdf

If industry was fully charged, there would be no subvention, however, there are certain costs (e.g. markets supervision) which it may be appropriate to continue to subvent on an ongoing basis where the costs cannot be attributed to specific firms but do relate to the orderly function of markets and the financial stability agenda.

As the Deputy will recall, in 2015, the Department of Finance and Central Bank of Ireland issued a joint public consultation on ‘Funding the cost of Financial Regulation’ (CP95).

In response to that consultation, my predecessor as Minister for Finance, Michael Noonan, agreed to a phased movement towards 100 per cent Industry Funding in order to eliminate subvention, by the taxpayer, of regulatory costs. Since then, recovery rates have increased in stages across most industry sectors, determined on a yearly basis. In April 2019, in order to give greater clarity to industry, I approved the trajectory to bring the recovery rate of levies across sectors to 100 per cent over the coming years. This change in policy will apply the user pays principle to the regulation of financial services.

The table below shows the planned trajectory for levy rates across all sectors. Credit Union recovery rates from 2022 onwards will be subject to review and a public consultation to guide strategy once 50% recovery rates have been achieved.

Levy Year	2017	2018	2019	2020	2021	2022	2023	2024
ELG Banks	100%	100%	100%	100%	100%	100%	100%	100%
Banks	65%	80%	90%	100%	100%	100%	100%	100%
Insurance Undertakings	65%	80%	90%	100%	100%	100%	100%	100%
Investment Firms & Fund Service Providers	65%	80%	90%	100%	100%	100%	100%	100%
Funds	65%	65%	80%	90%	100%	100%	100%	100%
Retail Intermediaries & Debt Management Co’s	50%	65%	70%	75%	80%	90%	100%	100%
Moneylenders	65%	65%	70%	75%	80%	90%	100%	100%
Approved Professional Bodies	65%	65%	70%	75%	80%	90%	100%	100%
Bureau de Change/Money Transmitters	65%	65%	70%	75%	80%	90%	100%	100%
Retail Credit / Home Reversion / Credit Servicing Firms	65%	65%	70%	75%	80%	90%	100%	100%
Payment & EMoney Institutions	65%	65%	70%	75%	80%	90%	100%	100%
Credit Unions	0.1% of total assets	0.1% of total assets	20%	35%	50%	TBC	TBC	TBC

Link: www.centralbank.ie/docs/default-source/publications/corporate-reports/annual-reports/annual-report-2020-and-annual-performance-statement-2020-2021.pdf

Tax Data

Questions (366)

Gerald Nash

Question:

366. Deputy Ged Nash asked the Minister for Finance the yield accrued from the standard rate of the section 627 exit tax charge of 12.5% in 2019 and 2020 respectively in tabular form; and if he will make a statement on the matter. [39929/21]

Written answers

Minister for Finance

As the Deputy may be aware, the current Exit Tax charge contained in section 627 of the Taxes Consolidation Act, 1997 (TCA 1997) was introduced as part of the transposition of the EU Anti-Tax Avoidance Directives (ATAD). The ATAD Exit Tax completely replaced the old exit tax regime, which was designed to counter a specific type of avoidance, and took effect from October 2018. Information in respect of any exit tax payable under the new regime is required to be be separately recorded on corporation tax returns for 2019 and subsequent years.

I am advised by Revenue that the available data for 2019 does not show any disposals giving rise to a charge to exit tax under section 627 TCA 1997. Information in respect of 2020 corporation tax returns is not yet available because all the returns are not yet filed and analysed. As the Deputy is aware, a company's corporation tax return filing date is determined by its accounting period end date. Companies with an accounting period end date of 31 December 2020 are not required to file their 2020 corporation tax return until 23 September 2021.

Tax Data

Questions (367)

Gerald Nash

Question:

367. Deputy Ged Nash asked the Minister for Finance the estimated additional yield to the Exchequer from a 0.1% and a 1% increase in the stamp duty applicable to transfers of shares, stocks and marketable securities in Irish incorporated companies; and if he will make a statement on the matter. [39930/21]

Written answers

Minister for Finance

I am advised by Revenue that the ‘Ready Reckoner’, which is available at www.revenue.ie/en/corporate/documents/statistics/ready-reckoner.pdf, shows on page 20 the estimated yield from changes to the rate of Stamp Duty on shares. The current rate of Stamp Duty on the transfers of shares is 1% and the proposed increases can be derived on a pro rata basis from the published table.

I am further advised by Revenue that as Stamp Duty liabilities in respect of the transfer of shares are not returned separately by place of incorporation, information specifically in relation to Irish incorporated companies is not available.

Tax Data

Questions (368)

Gerald Nash

Question:

368. Deputy Ged Nash asked the Minister for Finance the estimated cost to the Exchequer of reducing the interest on deferral of local property tax payments to an annual rate of 0.5% based on the latest available data in tabular form; and if he will make a statement on the matter. [39931/21]

Written answers

Minister for Finance

The interest rate for Deferrals of Local Property Tax (LPT) in respect of the current ‘Valuation Period’ (2013 to 2021) is 4%. The table below, in columns 1 to 4, sets out the number, value and accrued interest to date on Deferrals taken out each year from 2013 to 2020 (Deferrals for 2021 won’t attract interest if payment is made this year). Columns 5 and 6 in the table show the impact if the interest rate for the years in question was set at 0.5%.

Year	No of deferrals	Deferred Liability currently on record €M	4% Interest Accrued to date €M	0.5% Interest Rate €M	Reduction in amount of interest €M
2013	23,134	2.9	0.9	0.1	0.8
2014	30,081	7.1	2.2	0.27	1.9
2015	36,319	7.8	2.0	0.25	1.8
2016	44,641	9.1	2.0	0.25	1.8
2017	47,735	10.0	1.8	0.23	1.6
2018	46,331	9.9	1.4	0.17	1.2
2019	45,119	9.8	1.0	0.12	0.9
2020	43,393	10.4	0.65	0.08	0.6
Total			12.1	1.5	10.6

The interest rate to be applied to Deferrals of LPT in the new ‘Valuation Period’ (2022 to 2025) is reduced to 3%, as provided for in the Finance (Local Property Tax) (Amendment) Act 2021.

Tax Data

Questions (369, 448)

Gerald Nash

Question:

369. Deputy Ged Nash asked the Minister for Finance the estimated additional yield that would accrue from a dividend withholding tax rate of 41% on all dividends paid by REITs and IREF respectively in tabular form; and if he will make a statement on the matter. [39932/21]

Pearse Doherty

Question:

448. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be generated in 2022 by increasing the rate of dividend withholding tax for REITs and IREFs to 33%. [41357/21]

Written answers

Minister for Finance

I propose to take Questions Nos. 369 and 448 together.

Real Estate Investment Trusts (REITs) are corporate entities, and as such pay dividends to their shareholders. Dividend Withholding Tax (DWT), which is charged at 25%, must be applied to REIT distributions, other than those distributed to certain limited classes of investors such as pension funds and charities as they are more generally exempt from tax.

Irish Real Estate Funds (IREFs) are fund vehicles and therefore are not subject to DWT. They are instead subject to a 20% withholding tax on distributions to non-resident investors. Furthermore, Irish resident individuals/corporates are subject to investment undertakings tax. Certain categories of investors such as pension funds, life assurance companies and other collective investment undertakings are generally exempt from having IREF withholding tax applied provided the appropriate declarations are in place.

The yield from changes in the rates of withholding taxes on REITs and IREFs would be dependent on the level of future distributions by these entities. As such there is no basis available to provide an accurate estimate of these future distributions.

However, the Deputies may be interested to note the information published on IREFs in Table 18 of the Revenue research report which is available at www.revenue.ie/en/corporate/documents/research/ct-analysis-2021.pdf, which includes information for 2017-2019, based on returns filed.

Tax Data

Questions (370)

Gerald Nash

Question:

370. Deputy Ged Nash asked the Minister for Finance the cost to the Exchequer of claims for each individual item of allowable expenses against rental income based on the most recent data in tabular form; the cost to the Exchequer of claims from non-residential landlords; and if he will make a statement on the matter. [39934/21]

Written answers

Minister for Finance

I am advised by Revenue that as tax liability is calculated based on the combination of all incomes, reliefs, credits and deductions, it is not possible to provide an exact tax cost for the items outlined. To estimate tentative costs, it is possible to look at the amounts claimed under each item and apply an average marginal rate of tax. The average marginal rate of tax is the average rate across all taxpayer types and is not confined to those with a rental income.

I am advised by Revenue that 2018 represents the latest year for which complete data are available.

The table below sets out the estimated 2018 tax cost of the allowable expenses against rental income, separated into each individual item as declared on tax returns, and separated into residential and non-residential properties.

Expense Category	Residential Properties €m	Non-residential Properties €m
Repairs	87	15
Interest	97	47
Section 23 Relief	1.7	NA
Pre-Letting Expenditure	0.6	NA
Leasing of Farmland	NA	28
Other	123	40

Tax Data

Questions (371)

Gerald Nash

Question:

371. Deputy Ged Nash asked the Minister for Finance the estimated savings to the Exchequer from eliminating excise forgone on auto-diesel, marked gas oil, kerosene and fuel oil based on the latest available data in tabular form; the estimated savings to the Exchequer from ending the diesel rebate scheme and excise forgone on commercial sea navigation; and if he will make a statement on the matter. [39935/21]

Written answers

Minister for Finance

It is assumed that the Deputy is referring to setting the level of Excise for auto-diesel, marked gas oil, kerosene, and fuel oil as being equal to that for Petrol.

I am advised by Revenue that the estimated savings to the Exchequer from eliminating Excise forgone on auto-diesel, marked gas oil, kerosene, and fuel oil are shown in the table below.

Also included in the table are the savings from ending the Diesel Rebate Scheme (DRS), and the relief for Commercial Sea Navigation.

The estimates are based on 2020 data.

-	2020
	€m
Excise forgone: Excise rate on Auto-diesel	366.1
Excise forgone: Excise rate on Marked Gas Oil	488.3
Excise forgone: Excise rate on Kerosene	680.9
Excise forgone: Excise rate on Fuel Oil	24.9
Diesel Rebate Scheme	8.2
Commercial Sea Navigation	14.1

Tax Data

Questions (372)

Gerald Nash

Question:

372. Deputy Ged Nash asked the Minister for Finance the estimated yield to the Exchequer from an annual levy on insurance firm profits at a rate of 1%; and if he will make a statement on the matter. [39937/21]

Written answers

Minister for Finance

I am advised by Revenue that the trading profits of companies in Ireland are generally taxed at the standard Corporation Tax rate of 12.5 per cent. Some of the main features of the current Corporation Tax regime are its simplicity and that it applies to a broad base.

Changing this rate (or imposing additional levies on corporate profits) would involve increased complexity and could change the attractiveness of Ireland's corporate tax offering. It is not possible to accurately predict the effect that changes to the rate would have on the behaviour and decisions of large, multinational companies. This uncertainty prevents a reliable estimate being made of any yield that may accrue to the Exchequer.

Notwithstanding the above, I am further advised by Revenue that on a straightforward mathematical basis and assuming no behavioural changes by companies, the potential yield from imposing a 1% levy on the profits of insurance firms, is tentatively estimated to be in the region of €48 million in a year.

Question No. 373 answered with Question No. 343.

Tax Data

Questions (374)

Gerald Nash

Question:

374. Deputy Ged Nash asked the Minister for Finance the cost to the Exchequer of the removal and relocation expenses in 2018 and 2019 respectively in tabular form; and if he will make a statement on the matter. [39939/21]

Written answers

Minister for Finance

I am advised by Revenue that employers who pay employees’ removal and relocation expenses are required to keep relevant records for a period of at least 6 years. However, as there is no reporting requirement in relation to this provision, there are no data available on which to estimate the tax foregone.

Tax Data

Questions (375)

Gerald Nash

Question:

375. Deputy Ged Nash asked the Minister for Finance the estimated yield for an increase in the 12.5% rate for trading profits by either 0.5% or 1% and to increase the 25% rate for non-trading profits by 1%, 2% or 5%; and if he will make a statement on the matter. [39941/21]

Written answers

Minister for Finance

On a straightforward, mathematical basis there would be a theoretical yield from increasing the corporation tax rates for trading and non-trading income. However, the Economic and Social Research Institute (ESRI) reports that research from both the United States and Europe suggests that foreign direct investment (FDI) and the decisions of multinationals to locate in Ireland are highly sensitive to rates of corporation tax. Therefore, increasing the corporation tax rates would likely lead to lower levels of economic activity, behavioural changes in the locational decisions of multinational companies and employment in the multinational sector.

As a result of the difficulty of predicting and quantifying these impacts, particularly in the current economic climate, it is not possible to accurately or robustly estimate the potential yield from the increases proposed by the Deputy. I would note however that ESRI research in 2011 estimated that reducing Ireland’s corporation tax rate from 40% in 1994 to 12.5% in 2003 added almost 4% to the level of economic output in 2005 and around €2 billion in corporation tax revenues.

Furthermore, while corporation tax is statutorily levied on the profits of businesses, the ESRI states that researchers have concluded that a large share of the burden is likely to be borne by workers in the form of lower wages. This can arise from companies deciding to invest less, leading to lower capital and lower labour productivity and wages. As the ESRI found that small and medium enterprises (SMEs) predominantly finance their investments in fixed assets, intangible assets and staff through internal funds, raising the rates of corporation tax would hamper their ability to invest and grow.

Tax Data

Questions (376)

Gerald Nash

Question:

376. Deputy Ged Nash asked the Minister for Finance the estimated gains that would accrue to the Exchequer over the years 2021 to 2025 from the introduction of a minimum effective corporation tax rate of 12.5% and 15% respectively; and if he will make a statement on the matter. [39942/21]

Written answers

Minister for Finance

The trading profits of companies in Ireland are generally taxed at the standard corporation tax rate of 12.5%. Some of the main features of the current corporation tax regime are its transparency and that it applies to a broad base. Analysis undertaken by the Department of Finance, co-authored by an independent academic, a separate report undertaken by the Comptroller & Auditor General (C&AG), and Revenue’s annual analysis of corporation tax payments and returns, all confirm that the effective rate of corporation tax, using the most appropriate methodology, paid by corporations in Ireland is between 10% and 11%. While this percentage is lower than the 12.5% headline rate, this can be attributed to the availability of the small number of targeted tax measures that are provided for in legislation and may only be availed of where the legislative criteria for relief are satisfied. Compliance with these tax obligations and eligibility for tax reliefs are monitored by Revenue on an ongoing basis.

Notwithstanding the above, it should also be noted that seeking to impose a minimum effective tax rate would involve increased complexity and could change the attractiveness of Ireland’s corporate tax regime. It is not possible to accurately predict how the imposition of a minimum effective tax rate would affect the behaviour and investment decisions of multinational or domestic companies. Therefore, it is not possible to accurately or robustly estimate the potential Exchequer impact of these proposals.

The Deputy will also be aware that Ireland has expressed broad support for the OECD Inclusive Framework’s proposed two-pillar solution to address tax challenges arising from digitalisation and globalisation, but have expressed reservations in particular about the proposed global minimum effective tax rate of “at least 15%”. Given the importance of the OECD proposals, I have invited views through a public consultation and the consultation period will run until 10 September 2021.

Covid-19 Pandemic Supports

Questions (377)

Fergus O'Dowd

Question:

377. Deputy Fergus O'Dowd asked the Minister for Finance if a reply will issue to correspondence (details supplied) in relation to the urgent need for clarity regarding the Covid restrictions support scheme; and if he will make a statement on the matter. [39957/21]

Written answers

Minister for Finance

I understand that a reply has issued to the correspondence in question.

The Covid Restrictions Support Scheme (CRSS) is a targeted support for businesses significantly impacted by restrictions introduced by the Government under public health regulations to combat the effects of the Covid-19 pandemic. The support is available to companies, self-employed individuals and partnerships who carry on a trade or trading activities, the profits from which are chargeable to tax under Case I of Schedule D. The legislative basis for the scheme is set out in Finance Act 2020 and detailed operational guidelines, which are based on the terms and conditions of the scheme as set out in the legislation, are published on the Revenue website.

A qualifying business must operate from a business premises located in a region that is subject to restrictions introduced in line with the Government’s Living with COVID-19 Plan. For the purposes of the scheme, a business premises is defined as a building or other similar fixed physical structure from which a business activity is ordinarily carried on.

I am advised by Revenue that the business in question was in receipt of the CRSS from 13 October 2020 to 4 July 2021. The business should have ceased claiming the CRSS from 17 May 2021 when Government restrictions on non-essential retail were lifted. Following a review of its continued usage of the scheme, I understand that Revenue determined that it no longer meets the eligibility criteria and stopped the payments.

Revenue has engaged directly with the business to explain how the CRSS operates, to clarify why it no longer meets the eligibility criteria for the scheme and to confirm that the overpaid amount would be required to be repaid in due course. However, Revenue accepts that repayment of the amount owed as a single payment would cause further financial difficultly for the business. Given the circumstances, Revenue will add the amount owed to its warehoused debt even though the Debt Warehousing Scheme does not specifically provide for CRSS related liabilities. Revenue has also confirmed that it will continue to engage with the business as the need arises.

If the business disagrees with Revenue’s determination that it is not eligible for the scheme, it has the right to appeal the decision to the independent Tax Appeals Commission (TAC) within 30 days of receipt of the determination notice. Information and guidance on how to make an appeal to the TAC is available at www.taxappeals.ie.