Vol. 374 No. 11
(Limerick East) asked the Minister for Finance the criteria he applied in deciding whether or not he will issue a licence under section 30 of the Finance Act, 1987; the number of licences he has issued to date under section 30 (2) and section 30 (7); and if he will make a statement on the matter.
67.
asked the Minister for Finance the net Exchequer loss in respect of the corporation tax relief provisions of the Finance Act, 1987 for the Custom House Docks site's financial services sector for each year 1987 to 1992; and if he will make a statement on the matter.
I propose to answer Questions Nos. 65 and 67 together.
It is not possible at this very early stage to estimate the effect on tax yield of the extension of the 10 per cent rate of corporation tax to companies in the International Financial Services Centre to be located in the Custom House Docks area.
A company may be certified by me for the purpose of qualifying for the 10 per cent rate in the centre if it meets the requirements of subsection 30 (6) of the Finance Act 1987. These are, in summary, that (i) the company is engaged in a trade involving the provision of international financial services or ancillary services, (ii) the company will carry on this trade within the Customs House Docks area and (iii) the trading operations of the company will contribute to the development of the Custom House Docks area as an international financial services centre. As regards the last of these requirements, detailed performance criteria for each company will be agreed on a case by case basis and will be incorporated in the conditions attaching to the certificate as provided for in subsection 30 (3). Failure to meet the conditions of a certificate may result in its withdrawal in accordance with subsection 30 (4).
One certificate has been issued to date under subsection 30 (2) and the company to which this certificate has been issued will benefit from the provisions of subsection 30 (7) which permit trading outside the Custom House Docks area on a temporary basis pending the availability of suitable premises within the area.
(Limerick East): What the Minister read out as criteria is really the statutory framework within which he grants licences. Does he have a general criteria or is everything examined on a case-by-case basis? If so, why is there explicit criteria for the setting up of finance houses in the Shannon Free Airport Development Company? Could the same criteria apply in both cases so that the Shannon area will not continue to suffer from the six serious disadvantages, of which I am sure the Minister is aware, under which it operates at present? Has the Minister put a time limit on the licence he gave to the company availing of the provisions of section 30 (7) to operate the Custom House Docks site area or can people involved in financial services anywhere in the country enjoy the 10 per cent tax régime if they give a commitment that they will eventually move into the Custom House Docks site? How does the Minister propose to ring fence the activity to ensure that an increment is added to economic activity and that we are not simply licensing displacement from one part of the country to another?
The Deputy raised a number of important issues. I replied in a general way to the query regarding the criteria in the framework of the legislation. I have not gone into detail by reading section 30, which is two pages long, as I am sure the Deputy has a copy. The criteria for each company will be on a case-by-case basis but since the Deputy mentioned Shannon, a different area, specific criteria on a case-by-case basis will be set for each company in the international financial services centre and will not be dissimilar to the requirement imposed on companies in Shannon generally. In relation to the point about the ring fence, that is already covered in the case-by-case arrangements that will be made with a particular company. One cannot have an employment criteria right across the board because one type of operation may employ a maximum of ten people and another could have an employment potential of 1,000 people.
(Limerick East): When it operates on a case-by-case basis it is impossible to find out exactly what will happen. When people can enjoy a 10 per cent tax régime anywhere in the State simply by stating that they will eventually set up in the Custom House Docks area and complying with certain criteria, the Minister should inform the House how he intends to ensure that present activity in the financial area is not simply benefiting by the 10 per cent tax regime with no benefit to the economy or the Exchequer? At present, people in Dame Street, Ballsbridge and Dawson Street are——
May I advise Members of my desire to complete the three remaining questions within the prescribed period? I ask for the co-operation of Deputy Noonan, Deputy Desmond and others concerned.
(Limerick East): I do not wish to delay the House but this is an important point. Under section 30 (7), a particular finance house or bank can designate office numbers 31, 32 and 33 as the areas to which a 10 per cent tax régime applies. The Minister has not explained how he will ensure, in those circumstances, that no activity will occur and that we will not simply be giving a lower tax rate for existing activities on the promise that in four years' time the company will move to the Customs House site.
Trading outside the Custom House Docks area will be on a temporary basis pending the availability of space in the docks area.
What justification has the Minister for giving a licence to major financial institutions with headquarters in Ballsbridge, Baggot Street or Abbey Street for a tax write-off of £20 million on corporation profits tax this year, next year and for each of the next five years until ultimately they may finish up in the Custom House Docks site? It is an absolute scandal that the Minister should have produced this corporated profits tax.
Please, Deputy Desmond. Can I have brevity please?
Why does the Minister say that it is not possible to provide a net Exchequer revenue loss figure when inside in his Department, available to the last Government and to Cabinet Ministers, the net Exchequer loss is £20 million in corporation profits tax?
I am afraid the Deputy is imparting information rather than seeking it at this stage.
Can the Minister give any justification for that outrageous decision——
Deputy Desmond there are about five minutes left to dispose of the other three questions.
I know it is not the Minister's decision but the Taoiseach's decision with a couple of stockbrokers.
The only contribution the Deputy has to make is a negative one.
Can I have the next question, please?
This development has been hailed all over the place and it has been very successful. In so far as the tax foregone is raised by the Deputy, it is impossible until we see who is going to be in there——
We know who will be there.
We have said in the legislation here——
The Central Bank knows.
——that it is not for the purposes of people transferring from outside just into the ring fence, — the 10 per cent benefit——
Will the Deputy allow me to reply? I did not interrupt him.
The Deputy asked a question. He should be good enough to listen to the reply.
What we are trying to do is to attract new people interested in the promotion of international financial services in the Custom House Docks site. Most of that business is not being conducted here at the moment, therefore no tax has been foregone. If, as the Deputy suggests, people will move inside the fence from outside the fence it will only be in the context of the business they will do in an international field.
Can we have the reply to Question No. 66?
