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Dáil Éireann díospóireacht -
Tuesday, 18 Feb 1992

Vol. 415 No. 8

Written Answers. - Withholding Tax on Doctors' Fees.

Bernard Allen

Ceist:

191 Mr. Allen asked the Minister for Finance if he will clarify the situation relating to withholding tax being extended to payments to doctors made by ESB, Telecom Éireann, An Post, CIE and a large number of other State companies.

The withholding tax, which was first introduced in the Finance Act, 1987, applies to payments for professional services made to individuals and companies by accountable persons. The withholding tax applies to a wide range of professional services listed in the legislation. The current list of accountable persons, which is set out in the legislation, covers Government Departments, most of the major non-commercial State bodies, local authorities, health boards and authorised health insurers such as the VHI. I announced in my recent Budget Statement that from 6 June 1992 this list of accountable persons who apply withholding tax will be extended to include all the commercial State bodies and a number of other non-commercial State bodies.

Companies or individuals, such as doctors, who provide any of the listed professional services to the bodies listed in the legislation will have withholding tax deducted from their fees. The withholding tax involves the deduction of an amount equivalent to the standard rate of income tax from the payment and the transfer of that amount to the Revenue Commissioners. The standard rate was 35 per cent when withholding tax was first introduced and is being reduced to 27 per cent with effect from 6 April next. I would point out that the withholding tax involves no more than the withholding, on account, of an amount of tax due. Full credit for the amount withheld is given when computing the final tax liability. The scheme accordingly confers no additional tax liability on any individual or company and contains safeguards to ensure that no undue adverse effects arise from its operation. Principal among such safeguards is the provision for the payment of interim refunds, including interim refunds on grounds of particular hardship, during the individual or company's accounting period.
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