Dáil Éireann díospóireacht -
Wednesday, 1 Oct 1997

Vol. 480 No. 7

Written Answers. - Aer Lingus Group.

Joe Higgins

Ceist:

53 Mr. Higgins (Dublin West) asked the Minister for Public Enterprise the justification for TEAM Aer Lingus paying wages or salaries of a certain section of its workforce into foreign bank accounts; the number of workers who have been involved in this arrangement over the past four years; the total sums of money involved; whether PAYE tax was deducted from these payments; and if not, if she will give details of the equivalent amount of tax involved if these workers had been on the same tax system as the ordinary PAYE workers in the company. [14910/97]

Minister for Public Enterprise (Mrs. O'Rourke)

Internal arrangements for remuneration of staff within the Aer Lingus Group is a day-to-day management responsibility, in which I have no function.

However, because of the serious nature of the Deputy's questions, I want to put on record the facts as conveyed recently by Aer Lingus to my Department in response to allegations of possible tax irregularities in the group's maintenance subsidiaries. These allegations were made earlier this year to my predecessor and to the Minister of State at the then Department of Transport, Energy and Communications, as a result of which Aer Lingus were requested to submit a report on the matter.

On foot of this request, Aer Lingus commissioned an investigation and submitted the results to my Department. On the basis of this report, I am assured by Aer Lingus that the position is as set out in the following paragraphs.

Aer Lingus and its subsidiary companies are complying in all respects with their obligations under the PAYE/PRSI regulations, and no liability to PAYE/PRSI arises for the group from the contracts and practices which were the subject of the investigation.

TEAM Aer Lingus does not pay wages or salaries for any of its workforce into foreign bank accounts.

Group maintenance subsidiaries TEAM and Shannon Repair Services have a substantial ongoing need for contract workers which is common in the aviation maintenance industry in Ireland and worldwide due to the seasonality of the business. The degree of contract labour needed varies throughout the year to cater for the level of resources and skills necessary to meet customer requirements and deadlines.

This contract labour is sourced from a number of specialist third party companies. TEAM and SRS pay these third party companies directly on foot of invoices for work done and not the individual contractors. It is in relation to the payment methods of such third party companies in respect of contract labour that the question of taxation irregularities has arisen.

Aer Lingus have advised me that, as a result of their investigation, arrangements within the remit of these third party companies have been identified which are open to the interpretation that they were designed to facilitate potential evasion of tax.

While the Aer Lingus Group cannot be responsible for the taxation practices of third party companies with which they do business, nevertheless Aer Lingus is concerned to ensure as far as possible that any commercial arrangements in which the Group engages do not lend themselves to the facilitation of potential evasion of tax.

Therefore, while TEAM and SRS continue to have a requirement for contract labour, and while Aer Lingus tax advice is that, in relation to contract labour, taxation arrangements are a matter for the third party companies or the individual contractor, discussions have taken place between Aer Lingus and these companies to ensure that Irish tax legislation is complied with in full.

Aer Lingus have now confirmed to me that, resulting from these discussions, arrangements have been agreed with the third party suppliers of contract labour, relating to the payment of contractors, which ensure full compliance with Irish tax legislation.