Dáil Éireann díospóireacht -
Wednesday, 6 Jun 1990

Vol. 399 No. 7

Written Answers. - Tax Free Dividends.

Proinsias De Rossa

Ceist:

63 Proinsias De Rossa asked the Minister for Finance if he will make a statement on the use of tax free dividends from export sales relief shares to reward senior management; if, in view of the fact that this relief is available only to a small minority of well paid management, he will consider introducing a special sur-tax on dividends paid in this way; and if he will make a statement on the matter.

Minister for Finance (Mr. A. Reynolds)

Export sales relief for corporate profits terminated on 5 April 1990. It was an inherent part of the incentive that the tax exemption applied not only to the corporate profits involved but also to the dividends distributed from these profits to the shareholders in the companies concerned. The exemption will continue to apply to such dividends until the pool of export sales relieved profits existing as of 5 April 1990 is used up.

A surcharge on the lines proposed by the Deputy would not be appropriate. Section 54 of the 1974 Finance Act includes a safegurad to ensure that companies do not attempt to minimise the tax liability of senior management or other employees by paying them in shares which would attract a tax free dividend rather than a taxable salary. The section provides that where a person receives no emoluments from a tax relieved company for services rendered by him to that company, or receives emoluments in respect of such services which, in the opinion of the commissioners are not adequate as consideration for the services rendered, and that person receives tax relieved dividends from that company, the commissioners may deem part or all of the dividends to be emoluments of that person which are taxable in the ordinary way.