Written Answers Nos. 315-334
315. Deputy Pearse Doherty asked the Minister for Finance the tax expenditures and reliefs currently in place which are and are not factored into the base for the purposes of Budget 2023, itemised by name. [37242/22]
View answerI understand that an extensive list of tax expenditure measures with end-2022 sunset clauses in legislation was made available to the Committee on Budgetary Oversight in recent weeks. I am advised that the majority are costed at less than €15 million. Of the larger tax expenditures, measures such as the Help To Buy scheme and the reduced rate of USC for medical card holders are set to expire at end-2022. Whether or not to extend these schemes will be decided during the budgetary process.
The Budget Day costing of measures announced is published as part of the Budget documentation in the Tax Policy Changes booklet. At Budget 2022, the cost of the Help to Buy scheme in Budget package terms was estimated at €83 million. The full cost of the measure was estimated to be in the region of €175 million, of which €92 million was in the tax base.
In addition, at Budget 2022 the reduced rate of USC for medical card holders was costed at €62 million for 2022. However this was cost-neutral in Budget package terms as this measure was considered to be accounted for in the tax base.
The Budget package cost of extending measures with sunset clauses will be set out in the Budget Day documentation. If these measures were to be extended into 2023 these estimates would be subject to revision based on the latest available data: for example, it is currently estimated that the reduced rate of USC for medical card holders would cost in the region of €40 million in 2023. As the Deputy will appreciate, it would not be appropriate for me to speculate on policy decisions in advance of Budget Day.
316. Deputy Pearse Doherty asked the Minister for Finance the estimated cost of the reduced rate of VAT for the hospitality and tourism sectors from 1 January 2023 to 28 February 2023; and if this revenue is factored into the base for the purposes of Budget 2023. [37243/22]
View answerI am informed by Revenue that traders are not required to identify the VAT yield generated from the supply of specific services on their VAT returns. Therefore, it is not possible to provide an accurate costing for the potential measures outlined.
However, a tentative estimate using the most currently available third-party data would be in the region of €88m.
In-year policy measures do not form part of the Budget package for next year. The carryover cost of the reduced rate of VAT for the hospitality sector in the first months of 2023 will be accounted for in my Department’s fiscal projections but will not impact on the overall Budget package.
317. Deputy Pearse Doherty asked the Minister for Finance the projected GDP, GNI and deficit ranges for 2022 and 2023 as outlined in the Summer Economic Statement in nominal terms. [37245/22]
View answer318. Deputy Pearse Doherty asked the Minister for Finance the projected levels of inflation as per the Consumer Price Index underpinning the Summer Economic Statement. [37246/22]
View answerI propose to take Questions Nos. 317 and 318 together.
My Department produces two sets of macroeconomic and fiscal projections each year, both aligned with the European budgetary cycle.
Forecasts have not been updated since the spring forecasts, as set out in the Stability Programme Update (SPU).
That said, the Summer Economic Statement (SES) indicated that momentum in the domestic economy is slowing and it is fair to say that the risks to the Modified Domestic Demand projections for this year and next are tilted to the down side.
On the inflation front, clearly the incoming data has been higher than anticipated and I indicated at the press conference that we would see inflation averaging somewhere in the region 7-8 per cent for this year. On the basis of current energy prices, we would expect to be revising upwards somewhat our inflation projection for next year.
In terms of the fiscal projection, to compile the numbers set out in the SES, my officials took into account two factors that have changed since the SPU, namely the much stronger-than-expected tax receipts and the revised budgetary parameters (€6.7 billion versus €4.5 billion). On this basis, an indicative range as a share of GDP was provided. In nominal terms, mid-point of these ranges are the equivalent of surpluses of around €1¼ billion for this year and €2½ billion for next year. My officials also indicated that if corporation tax had remained at 2019 levels, ceteris paribus these figures would correspond to deficits of around €7 billion this year and over €6 billion next year.
320. Deputy Carol Nolan asked the Minister for Finance if his Department and bodies under the aegis of his Department have engaged the services of two organisations (details supplied) at any point from 1 January 2020 to date; the costs associated with or incurred by the provision of services from these organisations; and if he will make a statement on the matter. [37282/22]
View answerI wish to advise the Deputy that my Department and bodies under the aegis of my Department have incurred the following costs with the companies mentioned since January 2020 to date.
|
Carr Communications (ex VAT) |
Kinzen.com |
|
|
Department of Finance |
€3,087 |
€0 |
|
Central Bank of Ireland |
€23,950 |
€0 |
|
NTMA* |
€22,150 |
€0 |
|
Financial Services and Pensions Ombudsman (FSPO) |
€5,050 |
€0 |
|
Comptroller and Auditor General |
€5,016 |
€0 |
* The National Treasury Management Agency (the “NTMA”) provides business and support services and systems to Home Building Finance Ireland (“HBFI”), the National Asset Management Agency (“NAMA”), and the Strategic Banking Corporation of Ireland (the “SBCI”). The amount above includes costs recharged to HBFI, NAMA and the SBCI, as appropriate.
321. Deputy Alan Dillon asked the Minister for Finance the steps that are being taken to compel banks, funds, the National Asset Management Agency or others in possession of distressed assets (details supplied) to inventory and segregate loan portfolios on the basis of the size and location of the locality in which they are held; and if he will make a statement on the matter. [37336/22]
View answerThe Central Bank of Ireland is the independent regulator of credit institutions and other regulated financial service providers. However, it is not possible for the Minister for Finance, nor the Central Bank in carrying out its regulatory functions to advise or comment on the management of loans (and/or the treatment of any security which may be associated with a loan) by regulated entities as such issues are a business matter for the individual regulated entity.
However, at a general level, the Central Bank advises that loan arrears cases have individual circumstances, many of which are complex, that require real sustainable solutions and there is not a 'one size fits all' solution the issue of distressed debt. Nevertheless, holding a high stock of non-performing loans (NPLs) can affect the credit supply channel, by restricting the amount of capital that could be otherwise lent or used for more economically and socially useful activities, and can cause serious dysfunction for the banking system and hence its ability to serve the economy and its customers.
Therefore, the Central Bank expects credit institutions with a high proportion of NPLs to set, at a minimum, clearly defined realistic yet ambitious quantitative targets to reduce the level of NPLs. Where assets which acted as security for a loan are realised (such as properties in possession) are material, a strategy in respect of such assets should be defined or, at least, reduction targets should be included in the NPL strategy in respect of such assets.
Where this is a part of a credit institution’s NPL strategy, it should also monitor the volume, ageing, coverage and flows of such assets at a sufficient level of granularity to take into account material types of assets. The performance of such assets vis-a-vis the predefined business plan should be monitored.
The Central Bank acknowledges that resolution of NPLs might involve an increase in the number of properties in possession of regulated entities for the short term, pending the sale of those assets. However, this timeframe should be clearly limited as the aim is a timely sale of the assets concerned.
In relation to the National Asset Management Agency (NAMA), it advises that its loans are primarily segregated and managed by borrower/debtor connection as this was the most efficient way to manage the cross-secured loan portfolios originally acquired by NAMA and that the property assets securing NAMA's loans remain in the ownership and control of their registered owners (NAMA debtors) or appointed receivers, in the event of enforcement. Furthermore, NAMA has indicated that less than 1% of its remaining loan portfolio is secured by assets located in rural areas.
In relation to the issue of neglected buildings, the responsibility for dealing with derelict sites is a matter for the relevant local authority and there is a statutory duty on local authorities to take all reasonable steps to ensure that any land situated in their respective functional area does not become or continue to be a derelict site.
322. Deputy Paul Kehoe asked the Minister for Finance if he will consider increasing the exemption limit for people over 65 years of age from income tax in view of the current high inflation; and if he will make a statement on the matter. [37350/22]
View answerThe general position is that all tax expenditures and reliefs, including measures of the type mentioned by the Deputy, fall to be considered as part of the annual Budget and Finance Bill process.
The tax code provides for a number of tax credits and reliefs for those aged 65 and over.
The current age exemptions limits mean that single, widowed or surviving civil partners aged 65 or older do not pay any income tax if they earn less than €18,000 per annum with a threshold of €36,000 in place for a married couple or civil partners where one person is 65 years of age or older. The relevant income thresholds may be increased further if the individual has a qualifying child. The thresholds are increased by €575 in respect of both the first and second child, and €830 in respect of each subsequent child.
Marginal relief may be available where the individual’s or couple’s income exceeds the relevant exemption limit but is less than twice that amount. Where marginal relief applies, the individual or couple is taxed at 40% on all income above the exemption limit to a ceiling of twice the exemption limit. Once the income exceeds twice the exemption limit marginal relief is no longer available and the individual pays tax under the normal tax system. It should be noted, however, that where the individual’s income is greater than the exemption limit but below twice that limit, the taxpayer is always given the benefit of the more favourable treatment as between the use of marginal relief or the normal tax system of credits and bands.
Persons aged 65 or over may also avail of the age tax credit, which currently amounts to €245 per year for single persons or €490 per year for married couples or civil partners. Reduced rates of USC also apply for persons aged 70 or older where their total income is €60,000 or less.
As such, the current tax arrangements for persons aged 65 or older compare favourably with the tax treatment of the generality of taxpayers.
Additional guidance on the range of tax credits and reliefs that may be available for individuals over 65 years of age can be found in Tax and Duty Manual Part 15-01-26, which can be located at the following link – Tax and Duty Manual:
www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-26.pdf
With regard to cost of living increases, and as evidenced by recent actions and decisions, the Government is acutely aware of the cost pressures currently facing businesses and households, including people aged 65 years or over, and has responded to help alleviate some of this burden. On a cumulative basis, the Government has announced €2.4 billion in cost of living measures since last October. These measures include changes in tax and social welfare, the provision of an energy credit for households and a temporary reduction in the rate of VAT on the supply of certain energy products.
323. Deputy Michael Healy-Rae asked the Minister for Finance if he will increase the rates for tax relief (details supplied); and if he will make a statement on the matter. [37546/22]
View answerAs the Deputy will be aware, with effect from 1 January 2009, relief in respect of qualifying health expenses, with the exception of relief in respect of nursing home expenditure, has been granted at the standard rate of tax. Prior to that date, the relief was available at the taxpayer's marginal rate. The rationale for standardising health expenses relief was to widen the tax base and bring the rate at which relief was granted into line with the majority of tax expenditures. In addition, the standard rating of the measure has made the tax system fairer in that all beneficiaries may receive tax relief at the same rate, currently 20%.
In my view, the availability of tax relief at the standard rate of income tax for health expenses, including qualifying dental expenses, is the most appropriate use of limited fiscal resources. As such, I have no plans to change the position at this time.
In relation to the Deputy’s suggestion to reinstate a tax credit for refuse collection, this measure was abolished in with effect from 2011, in line with a recommendation of the 2009 Commission on Taxation. Recommendation 11.22 of that Commission's report stated that: “The polluter pays principle should continue to underpin waste charges to ensure that all consumers pay for their own waste.” The Commission considered that there was no sound rationale for tax relief on service charges and therefore recommended that the relief be discontinued.
There are no current plans to reinstate this credit.
324. Deputy Catherine Murphy asked the Minister for Finance the number of claims that have been taken against the State in respect of Covid that the State Claims Agency are processing as of 6 July 2022; the extract from the NIM system illustrating the claims; and the contingent liability that the State has in place in respect of Covid claims. [37688/22]
View answerI am informed that the SCA has received 90 claims, to date, in respect of COVID-19. These claims relate to service users, staff members and members of the public across delegated state authorities. I understand that the SCA does not, for litigation sensitivity reasons, disclose its contingent liability figures for a particular series or cohort of similar claims.
325. Deputy Colm Burke asked the Minister for Finance if consideration will be given to reducing VAT on deep retrofit works; and if he will make a statement on the matter. [37801/22]
View answer326. Deputy Colm Burke asked the Minister for Finance if consideration will be given to including the cost of VAT under the deep retrofit grant scheme; and if he will make a statement on the matter. [37802/22]
View answerI propose to take Questions Nos. 325 and 326 together.
As the Deputy will be aware, it is a long-standing practice of the Minister for Finance not to comment, in advance of the Budget, on any tax matters that might be the subject of Budget decisions.
It is possible for Ireland to apply the 9% reduced VAT rate to the supply and construction of housing, as part of a social policy and to the repair and renovation of residential housing. However as I have noted previously, having two separate VAT rates applying to construction services would introduce significant complexity to the sector and risks possible underpayments of VAT. There is also no obligation for any VAT reduction to be passed to the final consumer.
It is not possible to estimate a cost for this measure as traders are not required to separately identify the VAT generated from the sale or supply of specific products or services in their VAT returns.
327. Deputy Carol Nolan asked the Minister for Finance if there are plans to abolish the local property tax; the supports that are available to households that find they cannot afford to pay the tax; if he will consider suspending payment of the tax as part of his response to the cost-of-living crisis; and if he will make a statement on the matter. [37876/22]
View answerThe Local Property Tax (LPT) was introduced in 2013 to provide a stable and sustainable funding base for local authorities and is a significant base-broadening measure. LPT has yielded over €4 billion for Local Authorities since its introduction.
All property owners benefit from the essential local services LPT helps to fund. The proper functioning of these services is important for every community and household. Accordingly, it is equitable that the cost of providing the services should be shared by as broad a spectrum of owners as possible. If the tax were abolished, the funding gap would ultimately need to be met by the Exchequer in the form of increased general taxation. For these reasons, I do not plan to abolish the Local Property Tax.
The Finance (Local Property Tax) (Amendment) Act 2021 fulfils the Programme for Government commitment to bring forward legislation in relation to LPT on the basis of fairness and that most homeowners would face no increase in their LPT liability. The Act provides for a cut in the main rate of the tax and widening of the valuation bands to make the changes affordable. As these changes were implemented for the 2022 LPT year, this meant that the majority of homeowners saw either a decrease or no change in their LPT liability. Where increases arose, the majority were by a single band.
The LPT legislation provides for the possibility of deferring the charge to LPT in certain circumstances to assist individuals who may have difficulty paying the tax. A qualifying person may opt to defer, or partially defer, payment of the tax. Where a person qualifies for a full deferral then 100 per cent of the liability can be deferred. Where a person qualifies for partial deferral, then 50 per cent of the liability can be deferred. The balance of 50 per cent of the tax must be paid. The deferred tax remains as a charge on the property and must be paid before a sale or transfer can be completed. Interest is charged on the deferred amount. The interest charge is 4% per annum for LPT deferred for years 2013 to 2021; and the rate was reduced to 3% per annum for LPT deferred for the year 2022 and subsequent years. The income thresholds were increased in 2022 and are now €18,000 for a single person and €30,000 for a couple to qualify for a full deferral. The income limits to qualify for a partial deferral are €30,000 for a single person and €42,000 for a couple. It is also possible to apply for a deferral on the grounds of hardship if a person suffers an unexpected and unavoidable significant loss or expense as a result of which a person cannot pay their LPT liability without suffering financial hardship. Further information regarding the deferral of LPT is available on the Revenue website at: www.revenue.ie/en/property/documents/lpt/guidelines-for-deferral-of-lpt.pdf.
I am advised by Revenue that it has engaged extensively with residential property owners who are experiencing financial difficulties, to agree flexible LPT payment arrangements that best suit their circumstances and avoid unnecessary hardship, and Revenue has assured me that this will continue to be the case.
Any property owners experiencing financial difficulties can avail of a wide range of flexible payment options both in respect of 2022 liabilities and for any previous years where liabilities remain outstanding. The full range of payment options, which includes phased arrangements, are available to property owners on the Revenue website at: www.revenue.ie/en/property/local-property-tax/paying-your-lpt/index.aspx.
The LPT payment compliance rate for 2022 currently stands at 95%. Payment of the LPT for 2023 is not due until January 2023, at the earliest.
Finally, property owners experiencing difficulties in meeting their LPT obligations can contact Revenue through MyAccount at www.revenue.ie or by calling the LPT helpline (01) 7383626.
328. Deputy Denis Naughten asked the Minister for Finance the total cost of medical expenses tax reliefs in each of the past four years; the number of taxpayers who claimed these reliefs in each year; and if he will make a statement on the matter. [38031/22]
View answer329. Deputy Denis Naughten asked the Minister for Finance the total cost of health insurance tax reliefs in each of the past four years; the number of taxpayers who claimed these reliefs in each year; and if he will make a statement on the matter. [38032/22]
View answerI propose to take Questions Nos. 328 and 329 together.
I am advised by Revenue that the estimated cost of tax relief for health expenses and the estimated cost of medical insurance relief is included in the ‘Costs of Tax Expenditures Publication’ (Credits, Allowances and Reliefs), which is available at the following link: www.revenue.ie/en/corporate/information-about-revenue/statistics/tax-expenditures/costs-expenditures.aspx.
The current publication includes data up to 2019 in respect of medical insurance relief, and data up to 2018 in respect of health expenses tax relief. The health expenses data are due to be updated shortly, this information will be available at the same link as provided above.
For the convenience of the Deputy, the information requested is set out in the tables below:
Estimated cost of medical insurance relief
|
Year |
€ (Millions) |
Number of Claimants |
|
2019 |
355.2 |
1,314,700 |
|
2018 |
355.7 |
1,258,100 |
|
2017 |
350.0 |
1,271,400 |
|
2016 |
329.0 |
1,189,200 |
Estimated total cost (including nursing homes) of health expenses tax relief
|
Year |
€ (Millions) |
Number of Claimants |
|
2018 |
190.1 |
527,100 |
|
2017 |
172.5 |
486,200 |
|
2016 |
164.2 |
458,500 |
|
2015 |
155.1 |
444,700 |
330. Deputy Thomas Pringle asked the Minister for Finance the rate, in euros, of Government tax per litre of vehicle diesel and petrol; and if he will make a statement on the matter. [38045/22]
View answerIreland’s taxation of fuel is governed by European Union law as set out in Directive 2003/96/EC, commonly known as the Energy Tax Directive (ETD). The ETD prescribes minimum tax rates for fuel with which all Member States must comply. ETD provisions on mineral oils are transposed into national law in Finance Act 1999 (as amended) and this Act provides for the application of excise duty, in the form of Mineral Oil Tax (MOT), to specified mineral oils that are used as motor or heating fuels. MOT is comprised of a non-carbon component and a carbon component. The carbon component is commonly referred to as carbon tax and the non-carbon component is often referred to as “excise”, “fuel excise” or “fuel duty”. It is important to note that both components of MOT are excise. Total MOT rates are what are considered in terms of compliance with ETD minimum rates.
In accordance with the Value-Added Tax Consolidation Act, 2010, VAT is chargeable on petrol and auto-diesel at the standard rate, currently 23%, on the total amount which the supplier is entitled to receive including taxes, duties, levies and charges but excluding the VAT itself. A levy is also charged on petrol and diesel to cover the costs related to maintaining security of oil supplies. While both MOT and VAT are administered by Revenue the levy is administered by, and paid directly to, the National Oil Reserves Agency (NORA).
The Deputy will be aware that in March this year, in response to the current fuel crisis, I introduced significant reductions in the MOT rates for petrol and auto-diesel. These reductions, along with further reductions that came into effect on 1 April, are legislated to run until 11 October this year. Currently the rate of MOT applying to auto-diesel is €405.38 per 1,000 litres and the MOT rate on petrol is €465.98.
The following table provides a breakdown of the current taxes and the NORA levy applying to petrol and auto-diesel, based on the average retail prices as per the EC Weekly Oil Bulletin of 4 July 2022.
|
Petrol |
% of retail price |
Diesel |
% of retail price |
|
|
€/litre |
€/litre |
|||
|
Pre-Tax & NORA Levy |
1.27 |
59% |
1.32 |
61% |
|
NORA Levy |
0.02 |
1% |
0.02 |
1% |
|
MOT non-carbon |
0.37 |
17% |
0.30 |
14% |
|
MOT carbon |
0.09 |
4% |
0.11 |
5% |
|
VAT (23%) |
0.40 |
19% |
0.40 |
19% |
|
Total Tax & NORA Levy |
0.89 |
41% |
0.82 |
39% |
|
Retail Price |
2.16 |
2.14 |
331. Deputy Denis Naughten asked the Minister for Finance if he will review the valuation thresholds set for the help-to-buy scheme given both building and property inflation over the past five years; and if he will make a statement on the matter. [38049/22]
View answerThe Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund on Income Tax and Deposit Interest Retention Tax paid in the State over the previous four years, subject to limits outlined in the legislation. Section 477C Taxes Consolidation Act 1997 outlines the definitions and conditions that apply to the scheme.
An increase in the supply of new housing remains a priority aim of Government policy. HTB is specifically designed to encourage an increase in demand for new build homes in order to support the construction of an additional supply of such properties. For a property to qualify for HTB, it must be new or converted for use as a dwelling, having not been previously been used as a dwelling.
In respect of the maximum purchase value for a qualifying property to be eligible for HTB, data from the Central Statistics Office, relating to April 2022, indicate that the average sale price in the case of first time buyer owner occupiers nationally is €372,900. For Dublin, the equivalent figure is €472,100. Also, when we look at the breakdown of HTB claims by house price set out in Revenue's annual statistical report on the scheme for 2021, it sets out that some 76% of successful HTB claims in 2021 were for properties below €375,000 in value. While not necessarily conclusive in terms of providing a guide as to the maximum purchase price that should apply under the scheme, these figures offer a perspective on the current maximum of €500,000.
The Deputy may wish to note that work by external consultants, Mazars, on the review of HTB is nearing completion. The outcome of this review will help to inform decisions on the future of the scheme beyond its current sunset date of 31 December 2022. However, this is a matter that will fall to be considered by Government in the context of the Budget 2023 process and it would not be appropriate for me to offer further comment at this time.
332. Deputy Michael Lowry asked the Minister for Finance if he has considered the impact of the potential loss of corporation tax receipts on the Exchequer arising from the efforts by the European Union to strike a deal among the member states on a minimum tax rate; his plans to negate the impact of this; and if he will make a statement on the matter. [38057/22]
View answerOn 8 October 2021, members of the OECD/G20 Inclusive Framework on BEPS agreed to the statement on the ‘Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy’. Pillar 2 introduces a global minimum corporate tax rate of 15 per cent.
My Department and the Revenue Commissioners previously estimated that the cost of this agreement could be up to €2 billion annually when both pillars come into effect. However, this is an extremely challenging exercise, both in terms of timing and magnitude. Although there are two pillars to this agreement, it is important to understand that they are intended as integral parts of a single agreed solution. How they interact and the degree to which that interaction influences business behaviour is very difficult to predict.
It should also be stressed that what we have at the moment is a broad high level agreement on the main features of a solution. The agreement is planned to come into effect from 2024, but this requires a huge amount of technical work on how it will be implemented. These discussions have been ongoing since the agreement was concluded and will continue throughout this year. As technical discussions continue, officials from my Department and from Revenue will keep the position under review.
As I have highlighted on many occasions, the level of concentration in the corporate tax base represents a very real risk to the public finances. Our medium-term strategy over the next two budgets will be to invest in our public services, phase out temporary COVID-related spending and repair the public finances. In doing so, we will restore a fiscal buffer to be able to withstand the next crisis.
333. Deputy Michael Lowry asked the Minister for Finance if he will revise Ireland’s position on the European Union minimum corporation tax rate in light of challenges experienced by the French presidency to agree a consensus position among member states; and if he will make a statement on the matter. [38058/22]
View answerIreland made the commitment to the OECD agreement, which includes the global minimum tax rate, last October, as I believe that this agreement represents a fair compromise reflecting the competing interests of the many countries involved in the negotiations, large and small, developed and developing. It will ultimately bring long-term stability and certainty to the international tax framework, based on a shared understanding of where value is created in digital business models.
This is a global issue, which requires global action to solve in a coordinated way, in order to avoid the proliferation of unilateral tax measures and trade tensions. The EU Directive is the best method for implementation of the Pillar Two minimum effective tax rate within the EU, as it will allow for a consistent transposition, consistent with European law, by all Member States.
While the EU Directive has not yet been agreed, significant progress towards agreement was made during the French presidency of the Council of the European Union, and it is my expectation that unanimous agreement will be reached on the Directive this year.
The decision to join the global agreement was not taken lightly but I firmly believe this agreement brings a unique opportunity to reframe the international taxation architecture which has largely remained in place for almost a century.
Ireland looks forward to final agreement of the Directive soon and we remain actively engaged at the OECD where we are helping shape the detail of how the Pillar Two rules will work in practice, as we believe it is the best avenue to provide certainty for businesses.
334. Deputy Michael Lowry asked the Minister for Finance if he has considered the impact of the uncertainty of the delays in the adoption of the corporation taxation rate at European Union level on the capacity of companies to meet the administrative burden of compliance; and if he will make a statement on the matter. [38059/22]
View answerIreland signed up to OECD global agreement in October 2021, with Pillar Two consisting of a minimum effective tax rate of 15% for large corporates. The European Commission published its proposal for the EU Minimum Tax Rate Directive on 22 December 2021.
Ireland has been fully engaged on the technical work regarding the proposed Directive throughout the first half of 2022. Though agreement has not yet been reached by all Member States, Ireland looks forward to this happening later this year. Ireland fully supports the proposal as it is balanced and provides the certainty and stability which businesses need by avoiding divergent, unilateral measures in different countries.
It is essential, both for businesses and Revenue authorities, that the administrative processes for implementation of the agreed global minimum tax are clear and operable in practice, and further Pillar Two technical work is continuing at the OECD on matters such as information filing obligations.
Furthermore, the revised implementation timelines also now allow for a more considered implementation, in consultation with stakeholders. The European Commission initially proposed that the Pillar Two rules would be effective from 1 January 2023, however, the current draft Directive now provides that the rules will be applied within the European Union for periods of account beginning on or after 31 December 2023. With filing not due until 18 months after the initial period of account, for most companies this would mean that the first Pillar Two returns would not be due until mid-2026.
Ireland is mindful of the need to maintain an environment of certainty for businesses. We intend to follow through on our commitment made in October 2021 to the OECD agreement as the best means of achieving that certainty.
