Vol. 525 No. 1
72 Mr. Rabbitte asked the Minister for Finance the steps being taken to ensure that foreign companies do not abuse the new 12.5% corporation tax rate by the establishment of brass-plate companies; the discussions he has had with the IDA or other industrial development agencies in this regard; and if he will make a statement on the matter. [21556/00]
The 12½% rate of corporation tax was proposed by the previous Government and introduced by the current Government in the 1998 Finance Act. The new scheme provides for the 12½% rate to be phased in so as to apply fully from 1 January 2003. Subject to a small number of exceptions, the 12½% rate will apply to trading income of companies. Non-trading income will be taxable at 25%.
Discussions took place recently between senior civil servants of my Department and other relevant Departments and bodies on the possibilities that might arise for abuse of the new scheme. Following these discussions a working group, chaired by an official in my Department and containing representatives from the Revenue Commissioners, the Department of Enterprise, Trade and Employment and IDA Ireland was set up to examine the matter. The working group is looking at various ways to prevent any such abuse of the new scheme but I am not in a position at this stage to outline them to the House.
However, I assure the Deputy that, to the extent that any legislative changes might be needed, I would intend bringing forward whatever measures are appropriate to prevent abuse of the scheme.
