Tuesday, 21 Sep 2021

Written Answers Nos. 61-75

Covid-19 Pandemic

Questions (61)

Willie O'Dea

Question:

61. Deputy Willie O'Dea asked the Minister for Finance the total spend to date on the Covid-19 pandemic; and the amount by which the national debt has risen as a result. [44886/21]

Written answers

Minister for Finance

Over €48 billion has been allocated towards Covid measures from 2020 to 2022, in the form of taxation measures, direct expenditure measures and ‘below the line’ supports such as credit guarantees.

In 2020, €25 billion was made available in total, with €16.6 billion allocated in direct expenditure measures. Provisional outturn figures indicate that from this allocation, €15.4 billion was spent. Of that €15.4 billion, over €9 billion was spent on the Pandemic Unemployment Payment, the Employee Wage Subsidy Scheme and its precursor, the Temporary Wage Subsidy Scheme.

Outturn figures for 2021 are not yet available, however, including the measures announced in the Economic Recovery Plan , it is currently expected that Covid-19 direct expenditure supports will amount to around €15 billion this year, with a further €1.5 billion allocated for taxation measures.

Expenditure on the Pandemic Unemployment Payment and Employee Wage Subsidy Scheme in 2021 currently stands at approximately €7 billion.

General Government Debt at end-2019 - immediately before the pandemic - stood at €204bn. In this year’s Summer Economic Statement, year-end 2021 General Government Debt was forecast at €241.5bn, an increase of €37.5bn over the two year period. However, a revised deficit and debt forecast will be published as part of Budget 2022 .

Question No. 62 answered orally.

Tax Avoidance

Questions (63, 185, 186, 187, 188, 189, 190, 195, 196)

Mairéad Farrell

Question:

63. Deputy Mairéad Farrell asked the Minister for Finance his views on and response to recent reports that companies have continued to avail of the single malt despite the Competent Authority Agreement being enacted; and if he or his officials have been in contact with the Revenue Commissioners or the Maltese authorities since the agreement was put in place. [44877/21]

Gerald Nash

Question:

185. Deputy Ged Nash asked the Minister for Finance if his attention has been drawn to the fact that a company (details supplied) has been using a structure similar to the single malt tax avoidance structure to minimise its corporation tax bill; if the company received any assurances on the operation of this single malt type structure from the Revenue Commissioners; if his attention has been further drawn to any other company still using a single malt type or equivalent tax avoidance structure to avoid or minimise their corporation tax bills; and if he will make a statement on the matter. [44890/21]

Gerald Nash

Question:

186. Deputy Ged Nash asked the Minister for Finance the assessment that has been carried out of the use for tax purposes of Irish registered companies tax resident in Malta since the signing of the Ireland-Malta Competent Authority Agreement in 2018 (details supplied); and if he will make a statement on the matter. [44891/21]

Gerald Nash

Question:

187. Deputy Ged Nash asked the Minister for Finance the actions he plans to take to finally and permanently end the use of single malt style arrangements (details supplied); and if he will make a statement on the matter. [44892/21]

Gerald Nash

Question:

188. Deputy Ged Nash asked the Minister for Finance the assessment that has been made of the use for tax purposes of Irish registered companies tax resident in other tax treaty partner countries besides Malta since the residency rule changes in the Finance Act 2014 came into force on 31 December 2020; and if he will make a statement on the matter. [44893/21]

Gerald Nash

Question:

189. Deputy Ged Nash asked the Minister for Finance his views on whether the impact of Ireland's tax system on poorer countries continues to be insignificant as suggested by a spill over analysis conducted by his Department in 2014; his plans to conduct an updated spill over analysis in view of these revelations to update and accurately assess the impact of Ireland's tax system on poorer countries in view of reports regarding a company (details supplied); and if he will make a statement on the matter. [44894/21]

Gerald Nash

Question:

190. Deputy Ged Nash asked the Minister for Finance his views on whether the use of a single malt scheme by a company (details supplied) is consistent with Ireland's long-standing commitment to equitable international development; and if he will make a statement on the matter. [44895/21]

Neasa Hourigan

Question:

195. Deputy Neasa Hourigan asked the Minister for Finance if his attention has been drawn to reports (details supplied) of continued use of the single malt tax avoidance structure despite that structure being closed in 2018; and if he will make a statement on the matter. [44997/21]

Neasa Hourigan

Question:

196. Deputy Neasa Hourigan asked the Minister for Finance if his Department or the Revenue Commissioners gave a company (details supplied) or its subsidiaries or agents any assurances regarding tax treatment of the reorganisation in 2019 of its company structure, particularly related to companies; and if he will make a statement on the matter. [44998/21]

Written answers

Minister for Finance

I propose to take Questions Nos. 63, 185 to 190, inclusive, 195 and 196 together.

I am aware of recent media report regarding a publication concerning the tax arrangements of an individual taxpayer. From the outset, I must state that it is not appropriate for the Minister for Finance to comment on the tax affairs of individual businesses.

I am informed by the Revenue Commissioners that Revenue uses a range of resources to identify instances of tax avoidance, which would include tax avoidance arising from the arrangements described in the Agreement between the Competent Authorities of Ireland and Malta.

Those arrangements involved an exploitation of a mismatch of Irish and Maltese rules in relation to company residence and domicile, which could have led to income falling out of charge in Ireland and in Malta, resulting in double non-taxation of the income concerned. I cannot comment on the arrangements of any specific taxpayer. However, arrangements as described in the Christian Aid report are not arrangements that involve a mismatch of residence and domicile rules that would lead to double non-taxation, through amounts falling out of charge in both Ireland in Malta.

The purpose of the Ireland-Malta Competent Authority Agreement was to deter the arrangements described in the Agreement. The Christian Aid report appears to confirm that the Agreement was effective in achieving that purpose— and I am informed by the Revenue Commissioners that they have not identified information that would suggest otherwise. As regards those arrangements or any other aggressive tax planning, I have repeatedly stated that I will not hesitate to propose legislation to address tax avoidance, where it may not be possible to address arrangements within the existing code. The Revenue Commissioners liaise with my Department on that basis, in relation to potential loopholes they identify.

The Revenue Commissioners cannot comment directly or indirectly on the arrangements of a specific taxpayer. I am informed by the Revenue Commissioners – as a general statement and without their reference to, or implication in respect of, any specific case – that they do not provide confirmations or opinions to taxpayers on matters in respect of which they suspect there may be a tax avoidance purpose.

Revenue is strongly committed to identifying and challenging tax avoidance, including schemes that would seek to rely on Ireland’s Double Taxation Agreements. Revenue has reviewed Ireland’s Double Taxation Agreement (DTA) network in relation to the possibility of arrangements, similar to those addressed by the Ireland-Malta Competent Authority Agreement, being implemented using a different DTA. Specifically, Revenue has considered Ireland’s DTA with the United Arab Emirates (UAE), which has been cited in that regard.

I am further informed by the Revenue Commissioners that, in the absence of a generally-applicable corporate tax in the UAE, the UAE DTA contains provisions designed to prevent companies from qualifying as residents of the UAE for the purposes of the DTA. While Revenue will remain vigilant for indications of avoidance, they consider that DTA has been designed to prevent such possible use and that the risk of implementation of arrangements, similar to those addressed in the Competent Authority Agreement with Malta, is low in relation to the UAE DTA and other DTAs designed for restricted application.

For my part, I have repeatedly demonstrated that I am committed to taking action to ensure the Irish tax code is in line with new and emerging international tax standards as agreed globally. The January 2021 Update to Ireland’s Corporation Tax Roadmap highlights the actions that have already been taken and will continue to be taken in this process of corporation tax reform.

In this vein, it is important to remember that in recent Finance Acts, the Oireachtas has;

- substantially progressed transposition of the Anti-Tax Avoidance Directives through the introduction of Controlled Foreign Company rules, and anti-hybrid rules;

- introduced defensive measures against listed jurisdictions through enhanced Controlled Foreign Company Rules;

- updated transfer pricing rules;

- introduced legislation for OECD BEPS measures on mandatory disclosure rules; and

- substantially widened the scope of the Exit Tax regime — with the result that, on the migration of a company from Ireland to another country of residence, the increase in the value of assets to the date of the company’s departure will be chargeable to Irish tax.

It should also be recognised that Ireland has a longstanding General Anti-Avoidance Rule, which goes beyond the standard required in the EU Anti-Tax Avoidance Directives.

Further, in the upcoming Finance Bill, it is intended that we will complete the transposition of the Anti-Tax Avoidance Directives, with the introduction of interest limitation rules and anti-reverse hybrid rules. It is intended that these rules will take effect from 1 January 2022.

This reform is not complete: As set out in the update to the Corporation Tax Roadmap, over the coming years there are commitments to introduce a series of measures to further reform our corporate tax code, including through the introduction of measures to apply to outbound payments, further action against listed jurisdictions, as well as publishing a tax treaty policy statement with a particular focus on developing countries.

The need to carry out a further Spillover analysis is outweighed by the need to deliver on important ongoing policy priorities, including publishing a tax treaty policy statement with a particular focus on developing countries and taking due account of the international tax discussions, detailed in the January 2021 Update to Ireland's Corporation Tax Roadmap . A public consultation to inform this process has taken place and my officials are considering the content in detail to inform this process.

Data Centres

Questions (64)

Mairéad Farrell

Question:

64. Deputy Mairéad Farrell asked the Minister for Finance the estimated qualifying expenditure against which capital allowances have been claimed with respect to data centres and the estimated revenue foregone as a result since 2014; if his Department will undertake an analysis of the use of capital allowances with respect to data centres in the context of the State’s climate action objectives and energy capacity; and if he will make a statement on the matter. [44878/21]

Written answers

Minister for Finance

In June 2018, the Department of Enterprise, Trade and Employment published the ‘Government Statement on the Role of Data Centres in Ireland’s Enterprise Policy’, which sets out the strategic importance of data centres to Ireland’s overarching enterprise policy and to the attraction of foreign investment in the ICT sector. The Statement acknowledges that, as large consumers of electricity, data centres pose challenges to the capacity of our electricity grid and the future planning and operation of a sustainable power system.

The Government is currently preparing a new Climate Action Plan that will address, amongst other objectives, our ambition to further decarbonise our electricity system. We will seek to further decarbonise our electricity grid while simultaneously pursuing the electrification of sectors such as transport and heating and, crucially, preserving our security of supply and the reliability of our grid.

Arising from the Climate Action Plan, the Minister of Enterprise, Trade and Employment has indicated that the ‘Government Statement on the Role of Data Centres in Ireland’s Enterprise Strategy’ may need to be revised to reflect new policy and regulatory developments, ongoing challenges and potential opportunities facing the sector. The Government will seek to ensure that this important infrastructure for our wider technology sector and information based economy can be facilitated sustainably, and also that new data centre developments can be harnessed to drive the decarbonisation of our electricity system and deliver regional economic opportunities.

With regard to taxation, businesses may claim capital allowances on capital expenditure incurred on certain types of business assets and business premises. Capital allowances allow the wear and tear of plant and machinery be taken into account as a deduction for tax purposes. In general, such capital allowances are claimed at a rate of 12.5% annually, over eight years.

I am advised by Revenue that data centres are not separately identifiable on Revenue records. Nor is information captured on the nature of the claims for capital allowances by data centres in a manner that would enable the Deputy’s questions on specific activities to be answered.

Information is available on a sectoral basis, and Figure 6 of Revenue’s annual paper on Corporation Tax Payments and Returns provides a sectoral breakdown of capital allowances claimed on 2019 corporation tax returns, including information in respect of capital allowances claimed by the wider Information and Communication sector, which may be of interest to the Deputy.

The paper is available on the Revenue website at: https://www.revenue.ie/en/corporate/documents/research/ct-analysis-2021.pdf

Covid-19 Pandemic Supports

Questions (65)

Gerald Nash

Question:

65. Deputy Ged Nash asked the Minister for Finance his views on a recent study (details supplied) which suggests that 86% of workers who received the temporary wage subsidy scheme are now faced with a tax liability and that 75% of those who received the pandemic unemployment payment are faced with a tax liability; the number of persons who availed of the temporary wage subsidy scheme and pandemic unemployment payment, respectively who have faced a tax liability associated with these schemes; and if he will make a statement on the matter. [44844/21]

Written answers

Minister for Finance

The Temporary Wage Subsidy Scheme (TWSS) was introduced on 26 March 2020. It was legislated for in Section 28 of the Emergency Measure in the Public Interest (Covid-19) Act 2020 and was an emergency measure to deal with the impact of the Covid-19 pandemic on the economy. The TWSS was also intended to facilitate the retention of the employer/employee relationship thereby supporting the early recommencement of normal business when conditions allowed. The scheme operated until 31 August 2020 and was replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.

To ensure TWSS payments were made as quickly as possible to employees at the outset of the pandemic, income tax and the Universal Social Charge (USC) liabilities for 2020 were not taxed in the normal ‘real-time’ manner through the PAYE system and were instead calculated at the end of the year. These liabilities may be collected interest free over four years from 1 January 2022 by reducing employees’ tax credits. The EWSS restored the normal ‘real-time’ arrangements for PAYE with deductions made as employees are paid.

The Pandemic Unemployment Payment (PUP) which was legislated for in Finance Act 2020 is a social welfare payment for workers who became unemployed due to the COVID-19 pandemic. PUP payments are classified in legislation as income supports and as such are subject to income tax but are exempt from USC and Pay Related Social Insurance (PRSI). The standard mechanism to tax Department of Social Protection (DSP) payments is by reducing the recipient’s tax credits and rate bands and collect the liability through the PAYE system. However, like the TWSS, the PUP was not taxed in ‘real-time’ in 2020 and was instead calculated at the end of the year and may also be paid, interest free, over four years from 1 January 2022 by reducing employees’ tax credits.

Revenue published statistics in January 2021 on the preliminary end of year tax position for all PAYE taxpayers for 2020, which can be found on Revenue's website at the following link - https://www.revenue.ie/en/corporate/documents/statistics/registrations/paye-preliminary-eoy-statements.pdf

The statistics show that across the entire PAYE case base of over 2.3 million taxpayer units, including those in receipt of TWSS and/or PUP subsidy payments, over 80% had a preliminary end of year tax position that was either balanced, overpaid, or underpaid by less than €200.

The statistics also show that, for PAYE taxpayers that were in receipt of the TWSS only during 2020, 29% (79,800) were either due a refund or had no additional tax liability, while 71% (198,400) had an additional tax liability.

For PAYE taxpayers in receipt of the PUP only during 2020, 67% (203,900) were either due a refund or had no additional tax liability, while 33% (99,700) had an additional tax liability.

For PAYE taxpayers that received both TWSS and PUP in 2020, 42% (86,900) were either due a refund or had no additional tax liability, while 58% (112,500) had an additional tax liability.

Overall, for PAYE taxpayers that were in receipt of one or more of the supports (TWSS/PUP) during 2020, about 47% were either due a refund or had no additional tax liability, 23% had an additional tax liability of less than €500, 15% had an additional tax liability of between €500 and €1,000 and 15% had an additional tax liability greater than €1000.

Any liabilities owed could be reduced or eliminated by offsetting additional tax credits due, for example qualifying health expenses. These additional credits could be claimed by employees when completing their 2020 income tax return. As already advised, where a liability still exists after all additional tax credits are offset, the amount due can be collected, interest free, over four years from 1 January 2022, by reducing tax credits. For example, an underpayment of €200 will be collected over the four years at a rate of €1 per week.

Finally, I am aware that Revenue will facilitate the payment of TWSS related tax liabilities by employers who wish to do so on behalf of their employees. This includes the non-application of Benefit in Kind rules to payments made before the end of September 2021.

Fiscal Data

Questions (66)

Barry Cowen

Question:

66. Deputy Barry Cowen asked the Minister for Finance his assessment of the current state of the public finances. [44798/21]

Written answers

Minister for Finance

The Government's counter-cyclical approach to budgetary policy has - rightly - helped to absorb most of the impact of the pandemic. Government has deployed significant resources to limit the economic, health and societal fall-out from the necessary public health restrictions, and this was possible because of fiscal surpluses recorded in years preceding the pandemic.

Our successful vaccination programme has allowed for a gradual re-opening of the economy since the spring, and this has given rise to rapid economic recovery. The improving economy has, in turn, been an important tail-wind for the public finances. The most recent Exchequer returns showed a deficit of €6.7 billion was recorded at-August; this represents a €2.8 billion improvement on the same period last year. That said, although on a 12-month rolling basis, the deficit stands at €9.5 billion, so we cannot be complacent.

The year-on-year improvement in the deficit is primarily down to an over-performance in tax revenue, with income tax, corporation tax and VAT performing strongly. A general government deficit of around €20 billion (just over 5 per cent of GDP, 9.4 per cent of GNI*), was projected in the Summer Economic Statement. Given the over-performance on the revenue side, it is likely that the outturn will be lower than this. A revised deficit forecast will be published as part of Budget 2022 .

Budgetary policy must adapt to the changing public health situation. With mass immunisation and most sectors now re-opened, we must tailor our fiscal strategy accordingly. Our public debt stands at nearly a quarter of a trillion euros and, while we can absorb this, we can only do so if we slow, and eventually stop, the pace at which we add to it.

Accordingly, our strategy for Budget 2022 will be to begin reducing the gap between expenditure and revenue while continuing to invest in public services. On current estimates, by 2023 we will only borrow for capital investment.

Question No. 67 answered orally.

Covid-19 Pandemic Supports

Questions (68)

Alan Dillon

Question:

68. Deputy Alan Dillon asked the Minister for Finance the number of businesses and recipients in County Mayo that qualified for the Covid restriction support scheme and the employment wage subsidy scheme; the total expenditure paid out under both schemes within the county to date since the onset of Covid-19 pandemic; and if he will make a statement on the matter. [44855/21]

Written answers

Minister for Finance

Revenue publishes detailed statistics each week on the operation of COVID-19 support schemes, including both the Employment Wage Subsidy Scheme (EWSS) and the Covid Restriction Support Scheme (CRSS). These statistics are available on the Revenue website.

The most recently available data by county for EWSS (as of 9 September) indicates that 1,500 employers in Mayo have received subsidies totalling €105m since the start of the scheme in September 2020. For CRSS, the recent data (as of 26 August) show that 920 business premises in Mayo have received subsidies totalling €19m since the start of the scheme in November 2021.

Credit Unions

Questions (69)

Michael Moynihan

Question:

69. Deputy Michael Moynihan asked the Minister for Finance his proposals to enable credit unions fund social housing; and if he will make a statement on the matter. [44858/21]

Written answers

Minister for Finance

I am pleased to share with the Deputy that two credit union backed funds have received approval from the Central Bank. Credit unions will be able to invest in these regulated funds, which will subsequently lend to Approved Housing Bodies (AHBs). This will provide an additional funding channel for AHBs who will have a large role to play in the recently announced Housing for All Action Plan.

Following a review of the investment framework for credit unions in 2017, the Central Bank introduced amending investment regulations for credit unions. Since 1 March 2018, credit unions have been permitted to invest in regulated investment vehicles where the underlying investments are investments in Tier 3 Approved Housing Bodies (AHBs) for the provision of social housing. The regulations require that investments by credit unions in Tier 3 AHBs must be made through a regulated investment vehicle. The maximum permitted investment amount per credit union is 50% of a credit union's regulatory reserves where a credit union has total assets of at least €100 million and 25% of a credit unions regulatory reserves for all other credit unions. These limits may facilitate a combined sector investment in Tier 3 AHBs of €911 million.

It should be noted that the Department of Housing, Planning, Community and Local Government is the department with primary responsibility for the formulation and implementation of policy, and for the preparation of legislation, in relation to housing.

Departmental Policies

Questions (70)

Neale Richmond

Question:

70. Deputy Neale Richmond asked the Minister for Finance the progress made in implementing the Finance Action Plan 2021 which has four priority areas sustainable finance, diversity, regionalisation and digital finance. [44879/21]

Written answers

Minister for Finance

The Ireland for Finance Action Plan for 2021 was launched on 11 February to coincide with the hosting of the European Financial Forum, an event which showcases Ireland’s international financial services (IFS) environment to an international audience, and highlights the Irish Government’s commitment to the development of the international financial services.

The 2021 Action Plan has four priority areas; sustainable finance, diversity, regionalisation, and digital finance. It contains 16 new measures to build on the resilience shown by the IFS sector throughout the Covid-19 pandemic.

Ireland for Finance utilises a whole-of-government approach which is supported through ongoing collaboration between public and private stakeholders.

Progress on implementing the action measures is reported to my colleague, Sean Fleming TD the Minister of State for Financial Services, Credit Unions and Insurance, on a quarterly basis and considered at the quarterly meetings of both the Ireland for Finance High Level Implementation Committee and the Ireland for Finance Joint Committee.

Digital Finance

The new Fintech Steering Group in the Department of Finance has been established and work is underway. The group is making an active and significant contribution to the development of EU policies and proposed laws (as set out in the EU Digital Finance Package) to foster innovation in fintech while protecting consumers against risks. It is also coordinating policies on fintech across the Department and various sub-sectors of financial services in addition to engaging with other State bodies, industry stakeholders and interested firms as issues arise.

This group is complemented by an industry Fintech Foresight Group which is considering separate work-streams in relation to Digital Assets, Sandboxes, Open Banking, and ESG (Environment, Social, Governance). The Fintech Foresight Group has met with the Grand Canal Innovation District (GCID) team a number of times this year to discuss opportunities for collaboration.

Insurance Ireland have developed a comprehensive InsurTech Strategy and have set up the InsTech.ie hub to bring this strategy forward. A launch event for these initiatives was held on 21 July 2021 and the founding members are putting a business plan in place to roll the hub out further.

Technology ICT Skillnet have developed the MSc. In FinTech Innovation in partnership with Munster Technological University Kerry and Letterkenny Institute of Technology. 24 participants have completed the first year of the course which commenced in 2020 and the next intake of the programme is due to start in Q4 2021.

Aviation Skillnet has developed the ‘Certificate in Data Analytics’ as part of its Aviation Finance Leaders programme with UCD Professional Academy and this is due to commence on 30 September 2021.

Diversity

Financial Services Ireland (FSI) and the Banking & Payments Federation of Ireland (BPFI) in association with an Industry Review Group (60 firms and organisations) and a Stakeholder Advisory group (diversity best-practice professionals in the industry) have developed Ireland’s Women in Finance Charter, a guide to accompany the Charter and an industry reporting template. FSI/BPFI have completed phase one of this objective. Work is ongoing in relation to governance and reporting and the launch date for Ireland’s Women in Finance Charter is now likely to be by year-end.

The 100 Women in Finance NextGen Dublin Committee continue to host quarterly education and peer events. Events held so far in 2021 include “The Art of Resilience: An Essential Skill for Lockdown and Beyond”, “Technology Disruption and the Next Generation of Finance Leaders”, and “An Introduction to Private Equity in an Irish Context”. An event focussed on ESG will be held as part of Climate Finance Week 2021 in October.

The 30% Club Ireland Financial Services Group are promoting financial services careers as part of their “Career Less Ordinary” campaign to increase gender diversity in the sector. The ‘Career Less Ordinary’ campaign includes a promotional video, together with a collection of job profiles that describe a range of roles that go beyond those typically associated with the industry. These feature case studies of those who progressed their careers in the sector and look at the educational choices that helped get them there. A formal launch with Minister of State Fleming was held in September and the initiative will be promoted through Careers Portal and social media.

Regionalisation

Promoting investment into regional locations is one of the five core pillars of IDA’s new strategy, Driving Recovery and Sustainable Growth, which was launched in 2021. So far, IDA Ireland has had significant success in attracting investment into the regional locations, with over 48% of IDA’s job approvals located in the regions in the year-to-date.

Significant announcements in the regions in IDA’s portfolio include investor services group IQ-EQ creating 45 jobs in Shannon, alternative investment manager Alter Domus creating 100 jobs in Cork, and State Street’s decision to create 400 new jobs as part their new specialist team providing technology infrastructure and cybersecurity services from Kilkenny.

Enterprise Ireland’s regional office network (including through the regional enterprise groups) is engaged with stakeholders such as business innovation centres, accelerators and innovation hubs in regional locations as well as with regionally based groups focussed on financial services such as the Cork Financial Services Forum.

Enterprise Ireland have launched a “Start in Ireland” portal aimed at supporting entrepreneurs (including fintech firms) at different stages of development with information for potential, new and existing start-ups. Regionally based start-ups have the option to limit search results to immediate geographical locations by county or region to find out information on events, programmes, co-working spaces, accelerators or incubators, competitions, and funding opportunities.

Ireland’s NDRC (National Digital Research Centre) Accelerator is now centred in Dogpatch Labs in Dublin but critically the accelerator is also spread over three regional locations at Galway’s Portershed, Cork City’s Republic Of Work and Killorglin’s RDI Hub Kerry.

Sustainable Finance

The Department of Finance has worked with the European Commission and the other EU Member States on agreeing science-based standards for climate change adaptation and mitigation under the Taxonomy for sustainable activities. The EU Sustainable Finance Disclosures Regulation has been implemented in Irish law. My officials have started negotiations on the Commission’s proposal for a European Green Bond standard – a label that corporates and sovereigns could voluntarily use to demonstrate the credentials of their products. Finally, my officials have engaged in the development of the European Commission’s renewed Sustainable Finance Strategy, and also facilitated consultation on this new Strategy.

The Institute of Banking has developed a portfolio of training programmes in sustainable finance. The Institute of Banking advises that it is planning to publish details on a portfolio of sustainable finance programmes for the financial services sector after the National Sustainable Finance Roadmap has been published, which is expected later this year. The development of the skills matrix is being addressed in the context of the roadmap, where the Institute of Banking chairs the Skills Working Group.

The hosting of the Sustainable Finance Day Summit 2021 was postponed due to Covid. The topic will be covered during the series of events for Climate Finance Week Ireland, which will run from 11 to 15 October.

Progress in other areas

Due to the prioritisation of the Remote Work Strategy and its implementation, the commencement of the study by the Expert Group on Future Skills Needs (EGFSN) to assess the potential additional skills demands in international financial services has been delayed. The scope will be finalised in the coming weeks and consultants will be contracted to undertake the report commencing in Q4 2021 with an expected completion date of Q2 2022.

IFS Skillnet has developed its Leadership in a Regulated World course with 39 participants completing the in-company version of the programme to date. This programme will be made available again in 2022.

The CFA Society Ireland continue to promote uptake of their ‘Certificate in ESG Investing’ course which has seen 230 candidates register for or complete the certificate so far this year.

In Q1, the Central Bank published a Consultation Paper entitled: “Enhancing our Engagement with Stakeholders” which set out four key proposals. The consultation period closed on 11 May and the Central Bank is currently reviewing the responses received and is developing a feedback statement.

Industry and public sector stakeholders continue to promote Ireland as a location for international financial services through the hosting of events such as the European Financial Forum, Blockchain Ireland week, and the forthcoming Climate Finance Week Ireland in October.

Governance of Progress

The minutes of the quarterly meetings of the two committees that monitor progress are published on the Department of Finance website shortly after they are approved at the subsequent meeting. The minutes of the March 2021 meeting of the High Level Implementation Committee are available at https://www.gov.ie/en/collection/f412d5-public-sector-high-level-implementation-committee-hlic-minutes/ and the minutes of the March 2021 meeting of the Joint Committee are available at https://www.gov.ie/en/collection/4b2aa7-minutes-of-the-ifs2020-joint-committee-jc-meetings/ . The minutes of the meetings for the second quarter will be published once they are approved at the next meetings at the end of September.

An annual progress report for Action Plan 2021 will be published in 2022.

Tax Code

Questions (71)

John Lahart

Question:

71. Deputy John Lahart asked the Minister for Finance if he will report on his discussions on corporate taxation. [44787/21]

Written answers

Minister for Finance

The OECD Inclusive Framework has reached agreement, but not consensus, on key aspects of the two-pillar solution to address tax challenges arising from the digitalisation and globalisation. It is important to note that there are several critical issues to be resolved, including in respect to the proposed minimum effective tax rate.

I have been clear that I am broadly supportive of the agreement but I have a reservation, in particular, in respect to a commitment in the July interim agreement to a rate of ‘at least 15%’ for a global minimum effective tax rate. The process must bring about certainty and there are too many unknowns currently.

It is also the case that while Ireland is among a number of countries who have reservations on key issues such as the rate, others have expressed reservations on critical issues such as;

- the proportion of the reallocation of profits under Pillar One,

- on how any agreement will be consistently implemented,

- on the roll-back of unilateral measures such as digital services taxes,

- and, importantly also on the very ambitious implementation timeframes.

I have consistently said that we want to be part of the agreement at OECD. However, any agreement must bring certainty and stability, and currently there is a lack of clarity on what is in the agreement.

Given the economic importance of the OECD proposals to Ireland, I held a public consultation on the proposals, which ran until 10th September with submissions received from a broad range of interested stakeholders. These submissions are under consideration by my Department.

Discussions are continuing at the OECD with the objective of finalising key aspects of the agreement in October and we are fully committed to that process. The next key date in this process is expected to be the 8th of October when the OECD's Inclusive Framework will next meet.

I remain optimistic that an agreement can be reached which meets the needs of all countries and I can assure you that Ireland will continue to constructively engage in the further discussions and technical work.

Departmental Policies

Questions (72)

Jennifer Carroll MacNeill

Question:

72. Deputy Jennifer Carroll MacNeill asked the Minister for Finance the progress on implementing the Finance Action Plan 2021 with specific priority for sustainable finance; and if he will make a statement on the matter. [44683/21]

Written answers

Minister for Finance

Sustainable finance is a priority for me as Minister for Finance and is one of three priorities that apply across all of the pillars in which the work of the Ireland for Finance strategy for the development of the international financial services is framed.

The Ireland for Finance Action Plan for 2021 sets out ten action measures that deal specifically with developing and strengthening Ireland’s capacity and operating environment for sustainable finance. The table below sets out the summary of those action measures as published in Ireland for Finance Action Plan 2021: Building on Resilience , together with the name of the lead organisation and deadline for each of them.

No.	Title and Description of Action Measure	Lead Organisation	Deadline
1	Develop a National Sustainable Finance RoadmapDevelop a proposal for a Sustainable Finance Roadmap to guide Irish green and sustainable finance activities in the context of the European Green Deal and forthcoming Renewed Sustainable Finance Strategy. Analysing current trends and future needs, when approved, the Roadmap can guide Irish green and sustainable finance activities across the themes of Operating Environment, Technology and Innovation, Talent, and Communications and Promotion. In partnership with industry bodies and the Department of Finance, an output of the Roadmap will see Sustainable Finance Ireland and partners engage with senior decision-makers in Europe, Asia, and North America to showcase and promote the scale and sophistication of Ireland’s emerging green and sustainable finance activities, underpinning Ireland’s emergence as a green and sustainable finance product and services ‘Living Lab’. This is to be launched during Climate Finance Week Ireland 2021.	Finance Green Ireland Committee of Sustainable Finance Ireland	Q3
6	Engage at EU level on sustainable finance developmentsThe Department of Finance will monitor and seek to influence EU developments on sustainable finance, including initiatives emerging from the European Commission’s forthcoming Renewed Sustainable Finance Strategy.	Department of Finance	Quarterly
11	Continue to raise awareness of the responsible investment agendaAs a key platform for advancing the environmental, social, and corporate governance (ESG) agenda, the Sustainable and Responsible Investment Forum Ireland (SIF Ireland) will continue efforts to raise awareness of the ESG agenda across all Irish-located asset classes by means of its dedicated ESG best practice and digital library web portal, while supporting the Sustainable Finance Skillnet roll out of an ESG-focused skills development programme. Continuing to measure progress on advancing the agenda and identifying barriers to continued growth, SIF Ireland will take a deep dive into the ESG data agenda. SIF Ireland will also promote the merits of the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. The implementation of the recommendations represent best practice for companies and opens up access to more sustainable pools of growth capital while addressing the needs of investors for greater transparency. In addition, in support of biodiversity action, SIF Ireland will explore outstanding issues with assessing and managing biodiversity impacts, dependencies and risks for the financial sector.	Sustainable and Responsible Investment Forum Ireland	Q4
18	Continue the rollout of Ireland’s sustainable finance innovation programme supporting the development of new IFS environmental, social, and governance products and servicesIn light of the European Green Deal and the forthcoming EU Renewed Sustainable Finance Strategy, an increasing number of firms in Ireland are exploring the development of new products and services in support of the sustainable finance and the broader ESG agendas. Sustainable Finance Ireland will accelerate the rollout of this development via a dedicated intrapreneurship programme, in support of Irish firms’ efforts, thus contributing to Ireland’s emergence as a ‘Living Lab’.	Sustainable Finance Ireland	Q4
25	Develop a portfolio of sustainable finance programmesIn 2021, the Institute of Banking will launch a sustainable finance skills matrix, and associated learnings and programmes, that addresses the current and future skills need of the financial services sector.	Institute of Banking	Q2
27	Promote a Certificate in ESG InvestingCFA Society Ireland is always looking at innovation in financial and investment education and has recently launched a Certificate in ESG Investing. This certificate is designed for people who want to be recognised as leaders and experts in this area and who want to integrate environmental, social, and corporate governance (ESG) factors into the investment process. CFA Society Ireland will continue to promote uptake of this certificate in Ireland.	CFA Society Ireland	Q3
32	Deliver training programmes in sustainable finance and responsible investment supported by the Sustainable Finance SkillnetIn partnership with industry bodies, Sustainable Finance Ireland, via Sustainable Finance Skillnet, will continue to assess the demand and support the development of capacity-building programmes and qualifications where required in order to expand the market for sustainable finance and responsible investment in Ireland across key capital market segments, including banking, insurance, asset management, asset ownership, and funds.	Sustainable Finance Skillnet	Q4
44	Support the UN-convened Financial Centres for Sustainability global activitiesSustainable Finance Ireland will continue to support the UN-convened Financial Centres for Sustainability (FC4S) network as it works to accelerate global financial centres activities alignment with the Paris Agreement. This will be achieved via Sustainable Finance Ireland’s membership of the FC4S Network, plus a senior staff secondment to the FC4S Secretariat. Dublin will also host the FC4S Europe node office.	Sustainable Finance Ireland	Q4
45	Co-host Sustainable Finance Day Summit 2021Showcasing Ireland’s commitment to mobilising capital market participants in support of meeting the Paris Agreement and UN Sustainable Development Goals, Sustainable Finance Ireland will co-host the Sustainable Finance Development Day Summit, in partnership with the Department of Finance, the Department of Foreign Affairs, the World Bank, other multilateral agencies and the UN-convened FC4S, in Dublin, June 2020.	Sustainable Finance Ireland	Q2
46	Co-host Climate Finance Week Ireland 2021With COP26, the 26th UN Climate Change Conference, taking place in 2021, Climate Finance Week Ireland 2021 preparation will be focused on the important role that Irish-located financial service sector firms can play in support of the COP26 ambitions. Including Climate Finance Week Ireland 2021, this will be realised via a year-long public–private sector ‘Road to COP26’ campaign. It will focus on raising awareness among financial service sector firms that are located in Ireland on the importance of COP26 and how such firms can support this agenda, and it will highlight current Irish COP26-related activities that are already ongoing.	Sustainable Finance Ireland	Q3

Progress on implementing the action measures is reported to my colleague, the Minister of State for Financial Services, Credit Unions and Insurance, on a quarterly basis and considered at the quarterly meetings of both the Ireland for Finance High Level Implementation Committee and the Ireland for Finance Joint Committee.

Three of the ten action measures were required to report on progress in the first or second quarter of the year – action measures numbered 6, 25, and 45; the remaining seven action measures fall due for reporting until the end of the third or fourth quarters.

Two of the action measures for the first two quarters were reported as being ‘on track’ at the end of the relevant quarter: action measures 6 and 25.

Action measure 6 dealt with engaging at an EU level on EU developments, including negotiations on legislative measures. In that context, my Department has worked with the European Commission and the other EU Member States on agreeing science-based standards for climate change adaptation and mitigation under the Taxonomy for sustainable activities. The EU Sustainable Finance Disclosures Regulation has been implemented in Irish law. My officials have started negotiations on the Commission’s proposal for a European Green Bond standard – a label that corporates and sovereigns could voluntarily use to demonstrate the credentials of their products. Finally, my officials have engaged in the development of the European Commission’s renewed Sustainable Finance Strategy, and also facilitated consultation on this new Strategy.

Action measure 25 is the development by the Institute of Banking of a portfolio of training programmes in sustainable finance. The Institute of Banking advises that it is planning to publish details on a portfolio of sustainable finance programmes for the financial services sector after the National Sustainable Finance Roadmap has been published, which is expected later this year. The development of the skills matrix is being addressed in the context of the roadmap, where the Institute of Banking chairs the Skills Working Group.

The third action measure originally planned for reporting in quarter 2 is numbered 45 in the Action Plan, and it deals with the hosting of Sustainable Finance Day Summit 2021. That measure is led by Sustainable Finance Ireland, an organisation working to advance the sustainable financial agenda. The event was postponed due to COVID-19. The topic will be covered during the series of events for Climate Finance Week Ireland, which will run from 11 to 15 October.

The remaining seven action measures are due to report progress at the end of the third and fourth quarters this year.

The minutes of the quarterly meetings of the two committees that monitor progress are published on the Department of Finance website shortly after they are approved at the subsequent meeting. The minutes of the March 2021 meeting of the High Level Implementation Committee are available at www.gov.ie/en/collection/f412d5-public-sector-high-level-implementation-committee-hlic-minutes/ and the minutes of the March 2021 meeting of the Joint Committee are available at www.gov.ie/en/collection/4b2aa7-minutes-of-the-ifs2020-joint-committee-jc-meetings/ . The minutes of the meetings for the second quarter that was held in June will be published once they are approved at the next meetings at the end of September.

We have committed to ambitious and challenging climate action targets, through the Paris Agreement, EU level strategies and, domestically, the Climate Action and Low Carbon Development Act 2021.

The public sector must play a significant role, but it cannot face this mammoth task alone. At an EU-level, Ireland is engaging closely with the European Commission and our fellow Member States to set shared standards that will encourage and facilitate increased private sector financing for the key investments to help us achieve our shared climate goals.

Ireland strongly welcomes the European Commission’s renewed Strategy, which shows ambition that is much-needed to further expand and embed the reach of sustainable finance into our economies and financial systems.

The public sector cannot address the climate crisis alone; our progress at EU level to date, and this Strategy, are important actions to encourage and facilitate key investments to help us achieve our targets.

Insurance Industry

Questions (73)

Dara Calleary

Question:

73. Deputy Dara Calleary asked the Minister for Finance the measures he will be taking to address dual pricing in insurance. [44799/21]

Written answers

Minister for Finance

The Deputy will be aware that the Programme for Government includes a commitment to work to remove dual pricing, a form of differential pricing, from the insurance market. In this regard, the publication of the Central Bank’s Final Report and Public Consultation on Differential Pricing in the Motor and Home Insurance Market in July this year – two months ahead of schedule – was a major development in this area and marks the completion of a further deliverable of the Action Plan.

The Deputy will recall that the Central Bank’s Interim Report on this matter in December last year showed that consumers who do not shop around and switch regularly can be subject to a ‘loyalty penalty’. However, the report also indicated that differential pricing can also benefit new customers or those that engage with their provider, or switch provider regularly. The Government has consistently said that it is important that we also protect the ability of consumers to get a good deal.

The Bank’s Final Report this summer showed that the majority of motor and home insurance firms apply some form of differential pricing and that some of the pricing practices identified could result in unfair outcomes for some consumers.

Accordingly, the Central Bank is proposing to use its own powers to ban a practice known as ‘price walking’ in the motor and home insurance markets for personal customers. ‘Price walking’ is where customers are charged higher premiums relative to the expected costs they incur the longer they remain with an insurance provider. In addition to a price walking ban, the Central Bank is also proposing to require insurers to review their pricing policies annually and introduce new consumer consent and disclosure requirements around automatic renewals of all personal non-life insurance products. The Central Bank currently intends on having the new rules in relation to price walking in place on 1 July 2022 and I would strongly encourage all stakeholders to respond to the Central Bank’s public consultation on this matter, which runs until 22 October.

Finally, I think it is important to note that these proposals are evidence-based and tailored to the specific circumstances in the Irish market. The Government supports them and stands ready to assist the Central Bank in any way it can to enable it to implement its proposals, if required.

Question No. 74 answered with Question No. 32.

Tax Code

Questions (75)

Pádraig O'Sullivan

Question:

75. Deputy Pádraig O'Sullivan asked the Minister for Finance if the reduced VAT rate for the hospitality and tourism sector including hairdressers from 13.5% to 9% will be extended to include beauticians; and if he will make a statement on the matter. [45412/21]

Written answers

Minister for Finance

The VAT rates applying in Ireland are subject to the requirements of EU VAT law with which Irish VAT law must comply. Services consisting of the care of the human body, including beauticians, are subject to the 13.5% rate.

This arises from the fact that many of goods and services to which Ireland applies a reduced rate of VAT, including services related to care of the human body, have their basis under an EU derogation that provides that as Ireland applied a reduced rate to these items on 1 January 1991, we are entitled to continue applying that reduced rate to those items. However, this is conditional on the rate being no less than 12%. These are known as ‘parked’ rates, and are provided for under Article 118 of the EU VAT Directive. As the services provided by beauticians are part of these parked rates, it is not possible for Ireland to apply the rate of 9% to them.