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Dáil Éireann díospóireacht -
Thursday, 6 Nov 2003

Vol. 573 No. 5

Written Answers. - Tax Code.

Brendan Howlin

Ceist:

20 Mr. Howlin asked the Minister for Finance the progress which has been made by the Revenue Commissioners in their discussions with the Portuguese authorities with a view to closing off the tax loophole which allows those who sell off assets here to avoid tax by taking up residence in such countries as Portugal; and if he will make a statement on the matter. [25773/03]

In response to a parliamentary question on 30 September 2003, I stated that I had been informed by the Revenue Commissioners that a first round of negotiations for a protocol to amend certain provisions of the Ireland-Portugal Double Taxation Convention was held between the relevant Irish and Portuguese tax officials in Lisbon on 19 – 21 May 2003. The Revenue Commissioners have now informed me that a second round of negotiations is likely to be held before the end of this year but dates have not yet been finalised.

I should also explain that section 69 of the Finance Act 2003 contains an amendment to Irish domestic law which imposes a charge to capital gains tax on an individual in respect of a deemed disposal of certain assets on the last day of the last year of assessment for which the individual is taxable in the State, prior to becoming taxable elsewhere, where the individual disposes of these assets while resident outside the State and returns to the State within five years. I announced this anti-avoidance measure in my 2003 budget on 4 December 2002 with effect from that date.

Liz McManus

Ceist:

21 Ms McManus asked the Minister for Finance if he has completed his consideration of the submission received from the Department of Arts, Sport and Tourism regarding the implications of the proposed abolition of section 481 tax relief for film making; when he expects to make a decision on this issue; and if he will make a statement on the matter. [25764/03]

Jimmy Deenihan

Ceist:

32 Mr. Deenihan asked the Minister for Finance the reasons for his concern regarding the continuation of section 481 film tax relief; the evidence of the abuse of this tax relief; and if he will make a statement on the matter. [25816/03]

Jimmy Deenihan

Ceist:

62 Mr. Deenihan asked the Minister for Finance if he has received a report by a company, details supplied, on section 481 film tax relief, from the Department of Arts, Sport and Tourism; his plans to publish the findings of this report; and if he will make a statement on the matter. [25815/03]

Paul Nicholas Gogarty

Ceist:

81 Mr. Gogarty asked the Minister for Finance the reasoning behind the decision to abolish the section 481 of the Taxes Consolidation Act 1997. [22415/03]

Jack Wall

Ceist:

101 Mr. Wall asked the Minister for Finance the representations he has had from or discussions he has held with, the film industry here regarding his proposals to change the system of certain tax reliefs for the industry; and if he will make a statement on the matter. [22190/03]

Aengus Ó Snodaigh

Ceist:

109 Aengus Ó Snodaigh asked the Minister for Finance if his attention has been drawn to the findings of report commissioned by Screen Producers Ireland, RTE, Irish Actors Equity, IBEC, the Audio Visual Federation and SIPTU that the Irish film industry has experienced annual growth of 18%, has developed a highly skilled workforce of more than 4,000, has contributed ?107 million annually to the economy, has attracted ?136 million in foreign direct investment, and has given the Government a 3:1 return on its investment over the past ten years since the introduction of the section 481 tax relief; his views on these claims; and if he will make a statement on the matter. [26017/03]

I propose to take Questions Nos. 21, 32, 62, 81, 101 and 109 together.

Tax relief for the film industry was first introduced in 1984 under the business expansion scheme and has continued in various forms for the past 19 years. This makes it one of the longest running sector specific tax reliefs in the economy and has seen an Exchequer contribution in terms of tax foregone of the order of some €265 million in the past ten years alone. It should be noted that this relief has continued over time against a backdrop of the widening of the tax base and the reduction of rates generally. In the budget for 2003, I referred to the generally accepted principle that such reliefs narrow the tax base and that a widened tax base is the price that must be paid to retain the current low tax rates. Consequently, all tax reliefs must be subject to ongoing review. In that context, I announced in the budget that a number of these reliefs across a range of sectors including film relief would not be extended beyond 31 December 2004. It should be pointed out that my decision to announce a termination date of 31 December 2004 for this relief was made primarily for the reasons already outlined above rather than as a result of specific instances of abuse.

I am aware of the views of many in the film sector that have been expressed either directly to me by way of representations or indirectly through the media, with regard to the economic and social impacts of the termination of this relief in December 2004. The Minister for Arts, Sports and Tourism has recently forwarded to me a copy of a study reviewing the relief that was commissioned jointly by his Department and the Irish Film Board. I have asked officials from my Department to examine this study. However, as things stand, the position with regard to the 31 December 2004 termination date for this relief remains unchanged.

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