Dáil Éireann díospóireacht -
Tuesday, 20 Apr 1999

Vol. 503 No. 3

Written Answers. - Credit Union Taxation.

Michael D'Arcy

Ceist:

77 Mr. D'Arcy asked the Minister for Finance the discussions, if any, he has had with the League of Credit Unions on its request for a fair and equitable method of taxing the interest earnings and dividends of their members since the introduction of the Finance Act, 1999. [10026/99]

Emmet Stagg

Ceist:

104 Mr. Stagg asked the Minister for Finance if he has completed his deliberations in relation to the working party on the taxation of credit union interest and dividends; the contact, if any, he has had with the Irish League of Credit Unions; when a decision will be made on the matter; and if he will make a statement on the matter. [10206/99]

Minister for Finance (Mr. McCreevy)

I propose to take Questions Nos. 77 and 104 together.

Over several months, I have received written requests from the Irish League of Credit Unions seeking changes to the taxation of returns on credit union member savings. However, as I have indicated in my replies to these correspondences, this is a complex issue and there are a number of matters which must be considered before any decisions can be taken. Not least, there is the EU dimension which must be carefully examined. The corporation tax exemption for credit unions' surplus income has been questioned as a State aid in Brussels. While the EU Commission decided not to regard the exemption as a State aid, one consideration, I believe, which influenced its decision is the fact that the dividends paid out of such income are liable to income tax in the hands of the credit union members themselves. This benign attitude of the Commission to the corporation tax exemption could change if we were to exempt dividends from income tax. This EU dimension has only recently come to the fore. I am still considering this matter and as yet have no proposals in this regard.