Vol. 557 No. 1
128 Mr. Quinn asked the Minister for Finance the implications for investment here of the recent decision of the British tax authorities to introduce new rules for British subsidiary companies based here which effectively designate Ireland as an international tax haven; and if he will make a statement on the matter. [21298/02]
On 23 July 2002, the UK Government announced that changes in the rate of corporation tax in Ireland meant that it was no longer appropriate for companies operating in Ireland to enjoy automatic exemption from the UK's controlled foreign company, CFC, legislation which charges UK com panies to tax in respect of the income of certain CFCs in which they have an interest. A UK CFC is an overseas company controlled, at least by 25% interest, by UK residents which is subject to a level of taxation less than 75% of the level that it would have paid had it been resident in the UK.
There are a number of specific exemptions from the UK CFC legislation, including an excluded countries list. Up to the time of the change announced by the UK, Ireland was on the UK's excluded countries list and, therefore, Irish subsidiaries of UK companies enjoyed automatic exemption from the UK CFC legislation except for Irish companies availing of the 10% rate. Such companies could, however, avail of one of the other exemptions provided for in the UK legislation once they met various conditions. The effect of the change announced by the UK authorities was that Irish subsidiaries of UK companies are no longer automatically exempt from UK CFC legislation. However, they may still avail of the other exemptions provided that the conditions surrounding such exemptions are fulfilled.
I do not agree that the decision effectively designates Ireland as an international tax haven. It is my understanding that this was not the reason for the UK decision.
I see no reason we should not continue to attract our fair share of foreign investment as we have done in manufacturing which was always under the UK CFC regime.
Question No. 129 answered with Question No. 73.
