Conor Lenihan
Ceist:191 Mr. C. Lenihan asked the Minister for Finance the total tax take from the banking sector under the main tax headings. [13359/03]
Written Answers. - Tax Yields.
Conor Lenihan
Ceist:192 Mr. C. Lenihan asked the Minister for Finance the breakdown of the tax and levy contri bution made by the banking sector to the Exchequer. [13360/03]
I propose to take Questions Nos. 191 and 192 together.
I am informed by the Revenue Commissioners that the estimated corporation tax paid in 2002 by the banking sector, including advance preliminary tax, was of the order of €490 million. This covers banks and their Irish subsidiaries and includes an estimate of the tax paid by companies involved in banking activities in the IFSC. The amount does not include foreign tax paid by Irish financial institutions in respect of their overseas operations, which is likely to be significant.
A specific annual contribution to the Exchequer of €100 million per year is expected from the financial sector, including banks, over a three-year period commencing in 2003.
Other tax remitted by the banking sector, such as PAYE, DIRT on deposit interest and stamp duties on credit cards, ATM cards and cheques, are not included in the figures given, since the tax liability is not on the banks themselves.
Conor Lenihan
Ceist:193 Mr. C. Lenihan asked the Minister for Finance the total tax yield to the Exchequer from IFSC based companies in the banking and financial services sector. [13361/03]
Conor Lenihan
Ceist:194 Mr. C. Lenihan asked the Minister for Finance his views on the future development of the financial services centre; and the way in which it can continue to contribute to the economy. [13363/03]
I propose to take Questions Nos. 193 and 194 together.
The International Financial Services Centre (IFSC) was established by the Government in 1987. The key focus in establishing the centre was the desire to create a substantive and active financial centre which would generate quality sustainable employment for a well-educated young work force. An additional goal was to contribute to the renewal and regeneration of the Custom House Docks area. In 1998, the EU Commission reviewed its approval under EU state aid rules of the IFSC regime and agreement was reached on arrangements for phasing out the preferential IFSC regime in an orderly manner in conjunction with the introduction of the general 12.5% corporation tax rate from 1 January 2003 for all trading income, including financial services. Under the agreement reached with the Commission, projects approved prior to end July 1998, will continue to benefit from the preferential 10% rate until the end of 2005, while those approved after July 1998 could avail of the 10% tax rate until the end of 2002.
With regard to the tax yield from IFSC companies, I take it that the Deputy is referring to corporation tax. I understand from the Revenue Commissioners that the estimated corporation tax paid by these companies in 2002, including advance preliminary tax, was of the order of €700 million. The IFSC has been a major success and is now firmly established as a quality international financial services centre. In addition to the significant corporation tax yield from this sector, the IFSC makes a major contribution to Ireland, both in terms of the provision of high quality employment and our international profile. The international financial services industry estimate that there are 11,000 people directly employed in the IFSC and in associated back-office projects. The centre has also given rise to substantial indirect employment, in areas such as accounting, legal, computer and other general service industries. Substantial renewal of the docklands area has also been achieved.
In the context of the introduction of the general 12.5% corporation tax rate, the challenge for Ireland is to build on the substantial foundations that have already been put in place. The Government's strategy is to ensure that Ireland maintains its hard-won competitive edge in the global marketplace. Our goal is to ensure that the IFSC will continue to attract new operations by providing a supportive business environment. New products are coming on-stream and business opportunities are being identified and pursued. In that regard, the Finance Act 2003 included a number of initiatives which are designed to promote the further development of Ireland's international financial services industry. These include provisions on securitisation transactions, asset management and international pension funds investment. I am confident that the industry is well placed to continue to grow and develop this important sector of our economy into the future.